Terms in this set (25) the guns versus butter model is the classic example of the production possibility frontier. … It can buy guns, butter, or a combination of both. This relationship represents
a country’s choices between defense and civilian spending in more complex economies
.
Who makes a guns or butter decision?
The definition of guns and butter is an economic policy decision of whether a country is more interested in spending money on war or feeding their people. An example of guns and butter is
Denmark
taking care of their people, rather than being involved in war.
Does a country have to choose between having guns or butter?
The nation will have to decide which balance of guns versus
butter best fulfills its needs
, with its choice being partly influenced by the military spending and military stance of potential opponents.
What is a trade off between guns and butter?
guns and butter. Refers to trade offs that nations face when choosing whether to produce more or less military or consumer goods.
opportunity cost
. The most desirable alternative given up as the result of a decision. scarcity.
What is the purpose of the phrase guns or butter?
Guns and butter generally refers to
the dynamics involved in a federal government’s allocations to defense versus social programs when deciding on a budget
. Both areas can be critically important to a nation’s economy.
What are the 5 key economic assumptions?
- Self- interest: Everyone’s goal is to make choices that maximize their satisfaction. …
- Costs and benefits: Everyone makes decisions by comparing the marginal costs and marginal benefits of every choice.
- Trade- offs: Due to scarcity, choices must be made. …
- Graphs: Real-life situations can be explained and analyzed.
What are the three basic economic questions?
- What to produce? ➢ What should be produced in a world with limited resources? …
- How to produce? ➢ What resources should be used? …
- Who consumes what is produced? ➢ Who acquires the product?
What does Guns Before butter mean?
“Guns before butter” refers to
the debate over how governments should use their revenue
: should resources be used to build up the military, or should they be spent on domestic programs?
Whats the difference between guns and butter?
Guns represent defense i.e. weapons, ammo, etc.
Butter represents food, social programs
, etc. … things that grow in value over time and Butter as cars, jewlery, etc. or things that lose value over time.
How is opportunity cost defined?
What Is Opportunity Cost? Opportunity costs
represent the potential benefits an individual, investor, or business misses out on when choosing one alternative over another
. … Understanding the potential missed opportunities foregone by choosing one investment over another allows for better decision-making.
Why does every decision involve trade-offs?
Every decision involves trade-offs because
every choice you want results in picking it over something else
. Opportunity cost means choosing the better one of two ideas. There will always be an alternative; what could have happened instead.
What is one of the most important advantages of a free market?
For businesses, the main advantage of a free market economy is
the absence of bureaucracy and red tape
. This reduces administrative costs to the business; money which the company can put into other endeavors such as research and development.
What does the phrase guns and butter mean quizlet?
Guns & Butter. a phrase that refers to the trade-offs that nations face when choosing whether to produce more or less military or consumer
goods
.
Opportunity Cost
.
whatever must be given up to
obtain some item. Scarcity.
What are the basic economic assumptions?
People have rational preferences among outcomes that can be identified and associated with a value
. Individuals maximize utility (as consumers) and firms maximize profit (as producers). People act independently on the basis of full and relevant information.
What are the two most important assumptions in all economics?
| Question Answer | What are the two most important assumptions in all of economics? Scarcity (people have unlimited wants but limited resources) and everything has a cost |
|---|
What is the most basic economic problem?
What Is
Scarcity
? Scarcity refers to a basic economic problem—the gap between limited resources and theoretically limitless wants. This situation requires people to make decisions about how to allocate resources efficiently, in order to satisfy basic needs and as many additional wants as possible.
