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INSURANCE: Transferring risk to others. The need for insurance occurs because people tend to be risk averse in many circumstances. As such, most of us are willing to pay for certainty. Those who satisfy this need for insurance, insurance companies for example, do so because they can pool risk. If insurance companies know the chance of some loss (an accident, illness, or whatever) and its cost, then they can divide this cost among a large group of risk averse types. The insurance company agrees to pay the cost of the loss and each of the risk averse types pay a risk premium, but get the peace of mind that goes with certainty.
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Lesson 4: Production Possibilities | Unit 2: The Schedule
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Page: 5 of 24
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This is a simple, hypothetical production possibilities schedule for the economy.- The economy is using all resources with given technology to efficiently produce two goods, jogging shoes and quartz clock calibrators.
- Bundles A through K represent production alternatives for the economy, such as bundle D with 3 calibrators and 425 pairs of shoes. We have unlimited possibilities using available resources and technology to the fullest extent.
- All shoes, no calibrators, bundle A.
- All calibrators, no shoes, bundle K.
- Some of each good, bundles E or J.
- How about 9 calibrators and 410 pairs of shoes? No! Each bundle is the maximum we can produce.
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LEAKAGES Non-consumption uses of aggregate income. The three uses of income grouped under the heading of leakages are saving, taxes, and imports. Leakages subtract from the core circular flow containing consumption, production, and income. The injections-leakages model is a Keynesian economics analysis that combines leakages with injections (investment expenditures, government purchases and exports) to identify the equilibrium level of aggregate production and income.
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PINK FADFLY
[What's This?]
Today, you are likely to spend a great deal of time calling an endless list of 800 numbers wanting to buy either a wall poster commemorating the first day of winter or blue cotton balls. Be on the lookout for rusty deck screws.
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Post WWI induced hyperinflation in German in the early 1900s raised prices by 726 million times from 1918 to 1923.
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"A leader, once convinced that a particular course of action is the right one, must . . . be undaunted when the going gets tough." -- President Ronald Reagan
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AFC
Average Fixed Cost
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