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Council
For Economic Education Standards Standard 2 : Marginal Cost/Benefit
Effective
decision making requires comparing the additional costs of alternatives with the
additional benefits. Most choices involve doing a little more or a little less
of something: few choices are "all or nothing" decisions.
Related
concepts: Decision Making, Profit Motive, Benefit, Costs, Marginal Analysis, Profit,
Profit Maximization, Cost/Benefit Analysis
Standard 6 : Specialization
and Trade
When individuals, regions, and nations specialize in what they
can produce at the lowest cost and then trade with others, both production and
consumption increase.
Related concepts: Division of Labor, Production, Productive
Resources, Specialization, Factor Endowments, Gains from Trade, Relative Price,
Transaction Costs, Factors of Production, Full Employment
Standard 7
: Markets - Price and Quantity Determination
Markets exist when buyers
and sellers interact. This interaction determines market prices and thereby allocates
scarce goods and services.
Related concepts: Market Structure, Markets, Price
Floor, Price Stability, Quantity Demanded, Quantity Supplied, Relative Price,
Exchange Rate
Standard 14 : Profit and the Entrepreneur
Entrepreneurs
are people who take the risks of organizing productive resources to make goods
and services. Profit is an important incentive that leads entrepreneurs to accept
the risks of business failure.
Related concepts: Taxation, Costs, Costs of
Production, Entrepreneur, Risk, Taxes, Cost/Benefit Analysis, Innovation, Entrepreneurship,
Inventors
Standard 15 : Growth
Investment in factories, machinery,
new technology, and in the health, education, and training of people can raise
future standards of living.
Related concepts: Incentive, Interest Rate, Opportunity
Cost, Production, Technological Changes, Trade-off, Trade-offs among goals, Human
Capital, Intensive Growth, Investment, Physical Capital, Productivity, Risk, Standard
of Living, Economic Efficiency, Economic Equity, Economic Freedom, Economic Growth,
Economic Security, Investing, Business, Businesses and Households, Factors of
Production, Health and Nutrition, Savers, Savings, Stock Market Standard
16 : Role of Government
There is an economic role for government in a market
economy whenever the benefits of a government policy outweigh its costs. Governments
often provide for national defense, address environmental concerns, define and
protect property rights, and attempt to make markets more competitive. Most government
policies also redistribute income.
Related concepts: Externalities, Income,
Natural Monopoly, Redistribution of Income, Role of Government, Taxation, Transfer
Payments, Bonds, Distribution of Income, Income Tax, Maintaining Competition,
Monopolies, Negative Externality, Non-clearing Markets, Positive Externality,
Property Rights, Public Goods, Maintaining Regulation, Taxes, Regulation, Government
Expenditures, Government Revenues Standard 19 : Unemployment and Inflation
Unemployment
imposes costs on individuals and nations. Unexpected inflation imposes costs on
many people and benefits some others because it arbitrarily redistributes purchasing
power. Inflation can reduce the rate of growth of national living standards because
individuals and organizations use resources to protect themselves against the
uncertainty of future prices.
Related concepts: Types of Unemployment, Causes
of inflation, Consumer Price Index (CPI), Deflation, Labor Force, Unemployment,
Unemployment Rate, Inflation
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