Economics Final Review

the situation of having unlimited wants but limited resources

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• Scarcity

• Opportunity Cost

• Implicit Costs

• Explicit Costs

Label the Graph.

Opportunity Cost

• the situation of having unlimited wants but limited resources

• the most desirable alternative given up when a choice is made

• the traditional out of pocket costs associated with making a decision

• A punishment

Implicit Costs

• the situation of having unlimited wants but limited resources

• the most desirable alternative given up when a choice is made

• the traditional out of pocket costs associated with making a decision

• the amount that could have been earned if a different path had been chosen.

Explicit Costs

• the situation of having unlimited wants but limited resources

• the most desirable alternative given up when a choice is made

• the traditional out of pocket costs associated with making a decision

• the amount that could have been earned if a different path had been chosen.

Positive Incentive

• a reward

• a punishment

• the traditional out of pocket costs associated with making a decision

• the amount that could have been earned if a different path had been chosen.

Negative Incentive

• a reward

• a punishment

• the traditional out of pocket costs associated with making a decision

• the amount that could have been earned if a different path had been chosen.

Free Market Economy

• The laws of supply and demand allocate resources, goods, and services with little government interference

• All resources are owned and controlled by the government

• Everyone knows their role, there is little uncertainty

• There is lack of progress because things are done the way they always have been done.

Command Economy

• The laws of supply and demand allocate resources, goods, and services with little government interference

• All resources are owned and controlled by the government

• Everyone knows their role, there is little uncertainty

• Resources are controlled by households and businesses

Traditional Economy

• The laws of supply and demand allocate resources, goods, and services with little government interference

• All resources are owned and controlled by the government

• Everyone knows their role, there is little uncertainty

• Resources are controlled by households and businesses