D089 Unit 2 Economic way of thinking

D089 Unit 2 Economic way of thinking 5.0 (1 review) Students also studied Terms in this set (84) Social SciencesEconomics Macroeconomics Save WGU - D089 Principles of Economic...263 terms Marcel_GilesPreview pre assessment d089 70 terms Loveysbg21610 Preview D089 - Module 1 Teacher 37 terms WGU_Econ_CI_Team Preview Econom 323 term sav Economics studieshuman actions and decisions related to the production and distribution of scarce resources.There are two main areas of economicsmacroeconomics (focusing on large economic systems) and microeconomics (focusing on organizations and individuals).Individuals, organizations, governments, and countries must make decisions about how, what, and for whom to produce.The ten principles of economicsare interrelated and describe how people make decisions and interact and how the economy acts as a whole.What to produce?A property owner has 500 acres of flat land and has been approached by two different businesses. One business wants to drill for oil, and the other wants to raise cattle.How to produce it?A well-established company has been producing goods and wants to create a new line of production. The company needs to decide whether it should use a current factory or find a new location.For whom to produce?To address environmental concerns, Congress is considering a bill that would increase the price of electricity generated by coal. Increasing the price of electricity creates a problem for low-income households.Which scenario matches Principle 4 of economics— people respond to incentives?A sales manager offers a higher percentage of commission for a product that is not selling well.Principle 5: Trade can leave everyone in a better position.A farmer is really good at growing corn and exchanges the corn for meat and supplies.

Principle 6: Markets are a sound method of organizing

economic activity.Multiple producers and consumers exchange goods and services.

Principle 7: Governments sometimes have the ability to

better market outcomes.Companies face regulation when they create a monopoly in their industry What is a consequence of a government printing more money?decreased unemployment. Causes inflation. In the short run, this can lead to more jobs.Traditional economyThis system is based on culture and rituals handed down through generations. It is usually present in small, remote communities where members contribute equally towards one goal Command economyThe government makes all decisions regarding the production and distribution of goods, services, and human resources. Economic access is very limited for the general population Market economyConsumer choices drive the economy, and government involvement is limited.Production, distribution, and the prices of goods and services are allocated through consumer demand. There are no true market economies.Mixed economyMarket concepts are prevalent, but elements of other economies are also present, such as government regulations to ensure safety and fairness. Most countries conform to a mixed economy.What is a benefit of using a traditional economic system? Everyone knows their role in the market.Which characteristic is associated with a command economy?Competition is limited What is an advantage of a market economy?Innovation is encouraged and rewarded.What is a disadvantage of a mixed economic system? Freedom of choice can fluctuate from too much to too little.The microeconomic perspectivefocuses on parts of the economy: individuals, firms, and industries.The macroeconomic perspectivelooks at the entire economy, focusing on goals like growth in the standard of living, unemployment, and inflation.1 Positive economicsclearly states an economic issue Normative economicsprovides the value-based solution for the issue A modelis a framework designed to show complex economic processes. Its focus is to gain a better understanding of how things work, observe patterns, and predict the results.Economic indicatorshelp create predictions about economic changes

Which economic framework would a student use to study inflation in a country over past years?macroeconomics Which economic framework would a student use to explain past price changes in a specific industry?microeconomics Which economic reasoning is used in deciding among public policy goals?normative statements because fairness of outcomes should be considered.Which economic reasoning is involved when someone wants to study a country's output of gross domestic product (GDP)?macroeconomic theory Factors of productionare the resources the economy has available to produce goods and services.Laboris the human effort that can be applied to the production of goods and services.Capitalis a factor of production that has been created for use in the production of other goods and services.Natural resourcesare things found in nature that can be used to produce goods and services.Technology and the efforts of entrepreneursTwo keys to the use of an economy's factors of production What are the four factors of production?Natural resources, labor, capital, entrepreneurship Which criterion must be satisfied to include capital as a physical good or intellectual discovery?It has been produced already and is used for producing other goods and services.Why is technology an important part of entrepreneurship?Entrepreneurs use technology to best organize production.laborwages capitalinterest landrent production possibility frontiera simplified version of reality that allows you to observe, understand, and make predictions about economic behavior.When the factors of production are homogeneous the PPF is a straight line When the factors of production are heterogeneous the PPF has a bowed-out shape caused by increasing opportunity cost.Why do economists refer to all resources as scarce even though many of the factors of production are plentiful in regard to the production possibility frontier?Because resources are finite, there are trade-offs that must occur when companies or individuals make decisions regarding their wants or needs with their given resources to buy things.

When analyzing economic problems, especially when confronted with models of choice, economic models use simplifying assumptions to let them focus on choice.Which simplifying assumption is important for analyzing consumer behavior?specific prices Consider the concept of the production possibility frontier and a limited budget in regard to a model, chart, or graph.What happens as a consumer decreases spending on one of two choices?The consumer has more money to spend on the other item.Just like budget constraints that can be observed when trade-offs are applied between two items for an individual, companies that use the production possibility frontier model also use certain assumptions to simplify the analysis.What is one of the assumptions?no resources are wasted Since production is efficient on the production possibilities frontier it is not possible to produce more of one good without sacrificing the production of the other good.Technological advances, an increase in resource quality or quantity, and an increase in trade can shift the production possibilities frontier outward, making what was previously unattainable attainable.An inefficient outcomeoccurs when a circumstance such as excessive unemployment results in a country producing less than it could from its available resources.A seller has 10 hours to either bake cakes or make holiday ornaments to sell at the local farmers market. The seller is currently producing at a point on their production possibility frontier.Which decision is both attainable and efficient?Producing less of one good and more of the other good A country is producing on its production possibility frontier (PPF) with respect to capital and consumption goods. Policy makers are considering policies to help the country grow and produce combinations of goods that it currently finds unattainable.Which policy will be successful in meeting this goal?Increasing skilled labor in public and private sectors through relaxed immigration laws A country has a recent innovation in energy production that is leading to low cost renewable energy.What will happen to this country's production of both capital and consumption goods?Its production possibility frontier will shift out, and more combinations of goods will be attainable.Two countries have entered into a mutually beneficial trade agreement.What will happen to production technology and the mix of goods produced in these countries?It will generate greater innovation in production technologies and increase the amount of attainable combinations of goods produced.