Resource Allocation and Economic Systems - AP Microeconomics
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What is the primary goal of economic efficiency?
What is the primary goal of economic efficiency?
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Maximize output with given resources. Achieve maximum production from available resources without waste.
Maximize output with given resources. Achieve maximum production from available resources without waste.
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Describe a traditional economy.
Describe a traditional economy.
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A traditional economy is based on customs, history, and time-honored beliefs. Decisions follow established cultural practices passed down generations.
A traditional economy is based on customs, history, and time-honored beliefs. Decisions follow established cultural practices passed down generations.
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Identify the main advantage of a command economy.
Identify the main advantage of a command economy.
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It can quickly mobilize resources. Central control enables coordinated response to national priorities.
It can quickly mobilize resources. Central control enables coordinated response to national priorities.
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How does a mixed economy allocate resources?
How does a mixed economy allocate resources?
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Through both market forces and government intervention. Combines price signals with government regulation and planning.
Through both market forces and government intervention. Combines price signals with government regulation and planning.
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Describe a traditional economy.
Describe a traditional economy.
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A traditional economy is based on customs, history, and time-honored beliefs. Decisions follow established cultural practices passed down generations.
A traditional economy is based on customs, history, and time-honored beliefs. Decisions follow established cultural practices passed down generations.
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What is the definition of an economic system?
What is the definition of an economic system?
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An economic system is an organized way a society allocates resources and distributes goods and services. Shows how societies decide who gets what, when, and how.
An economic system is an organized way a society allocates resources and distributes goods and services. Shows how societies decide who gets what, when, and how.
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Identify the primary economic systems.
Identify the primary economic systems.
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Traditional, Command, Market, Mixed. These represent the four main ways societies organize production and distribution.
Traditional, Command, Market, Mixed. These represent the four main ways societies organize production and distribution.
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What characterizes a command economy?
What characterizes a command economy?
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In a command economy, the government makes all economic decisions. Central planners control what, how, and for whom goods are produced.
In a command economy, the government makes all economic decisions. Central planners control what, how, and for whom goods are produced.
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Identify a policy tool for correcting negative externalities.
Identify a policy tool for correcting negative externalities.
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Pigovian tax. Tax on activities that create negative externalities to reduce them.
Pigovian tax. Tax on activities that create negative externalities to reduce them.
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Identify one factor that can shift a PPF outward.
Identify one factor that can shift a PPF outward.
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Technological advancement. Improves productivity, allowing more output from same inputs.
Technological advancement. Improves productivity, allowing more output from same inputs.
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Which economic system combines elements of market and command economies?
Which economic system combines elements of market and command economies?
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Mixed economy. Uses both market mechanisms and government planning for allocation.
Mixed economy. Uses both market mechanisms and government planning for allocation.
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How does a mixed economy allocate resources?
How does a mixed economy allocate resources?
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Through both market forces and government intervention. Combines price signals with government regulation and planning.
Through both market forces and government intervention. Combines price signals with government regulation and planning.
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Identify the main advantage of a command economy.
Identify the main advantage of a command economy.
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It can quickly mobilize resources. Central control enables coordinated response to national priorities.
It can quickly mobilize resources. Central control enables coordinated response to national priorities.
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What is a Production Possibility Frontier (PPF)?
What is a Production Possibility Frontier (PPF)?
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A curve depicting maximum feasible amounts of two products that a nation can produce. Shows trade-offs between different production possibilities given resources.
A curve depicting maximum feasible amounts of two products that a nation can produce. Shows trade-offs between different production possibilities given resources.
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Identify one factor that can shift a PPF outward.
Identify one factor that can shift a PPF outward.
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Technological advancement. Improves productivity, allowing more output from same inputs.
Technological advancement. Improves productivity, allowing more output from same inputs.
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Which economic system combines elements of market and command economies?
Which economic system combines elements of market and command economies?
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Mixed economy. Uses both market mechanisms and government planning for allocation.
Mixed economy. Uses both market mechanisms and government planning for allocation.
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State the formula for calculating opportunity cost.
State the formula for calculating opportunity cost.
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Opportunity Cost = Next Best Alternative Foregone. The value of the best alternative choice that must be given up.
Opportunity Cost = Next Best Alternative Foregone. The value of the best alternative choice that must be given up.
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In which system are prices most flexible?
In which system are prices most flexible?
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Market economy. Supply and demand forces allow rapid price adjustments.
Market economy. Supply and demand forces allow rapid price adjustments.
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Identify a consequence of an economic system with no private property.
Identify a consequence of an economic system with no private property.
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Lack of individual incentives. People have no personal stake in improving productivity or efficiency.
Lack of individual incentives. People have no personal stake in improving productivity or efficiency.
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Which economic system is most likely to promote innovation?
Which economic system is most likely to promote innovation?
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Market economy. Competition and profit incentives drive entrepreneurship and creativity.
Market economy. Competition and profit incentives drive entrepreneurship and creativity.
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What is the main disadvantage of a command economy?
What is the main disadvantage of a command economy?
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Lack of incentives for productivity and innovation. Without profit motive, workers and managers lack efficiency incentives.
Lack of incentives for productivity and innovation. Without profit motive, workers and managers lack efficiency incentives.
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Identify the primary economic systems.
Identify the primary economic systems.
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Traditional, Command, Market, Mixed. These represent the four main ways societies organize production and distribution.
Traditional, Command, Market, Mixed. These represent the four main ways societies organize production and distribution.
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What characterizes a command economy?
What characterizes a command economy?
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In a command economy, the government makes all economic decisions. Central planners control what, how, and for whom goods are produced.
In a command economy, the government makes all economic decisions. Central planners control what, how, and for whom goods are produced.
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What is the role of government in a market economy?
What is the role of government in a market economy?
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Minimal, mainly to enforce laws and protect property rights. Government provides framework but avoids direct economic control.
Minimal, mainly to enforce laws and protect property rights. Government provides framework but avoids direct economic control.
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What does a point inside the PPF indicate?
What does a point inside the PPF indicate?
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Inefficient resource use. Resources are not being used to their full potential.
Inefficient resource use. Resources are not being used to their full potential.
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Which economic system uses central planning?
Which economic system uses central planning?
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Command economy. Government agencies coordinate all production and distribution decisions.
Command economy. Government agencies coordinate all production and distribution decisions.
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What role do prices play in a market economy?
What role do prices play in a market economy?
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Prices signal resource allocation. Higher prices indicate greater demand or lower supply for resources.
Prices signal resource allocation. Higher prices indicate greater demand or lower supply for resources.
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What is the invisible hand?
What is the invisible hand?
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The unseen forces that move the free market economy. Adam Smith's concept of self-interest guiding efficient market outcomes.
The unseen forces that move the free market economy. Adam Smith's concept of self-interest guiding efficient market outcomes.
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Define consumer sovereignty.
Define consumer sovereignty.
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The power of consumers to decide what gets produced. Consumer choices determine which goods and services are produced.
The power of consumers to decide what gets produced. Consumer choices determine which goods and services are produced.
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Which system encourages consumer sovereignty?
Which system encourages consumer sovereignty?
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Market economy. Consumer demand directly influences production decisions through prices.
Market economy. Consumer demand directly influences production decisions through prices.
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