The Economic Way of Thinking

Question 1

Consumers have 2 basic needs:

Answer 1

Wants

Needs

Question 2

___ are desires that can be satisfied by consuming a good or service

Answer 2

Wants

Question 3

___ are things such as food, clothing, and shelter, that are necessary for survival

Answer 3

Needs

Question 4

___ is the situation that exists when there are not enough resources to meet human wants

Answer 4

Scarcity

Question 5

___ is the study of how people choose to use scarce resources to satisfy their wants

Answer 5

Economics

Question 6

___ is central to the use of scarce resources

Answer 6

Choice

Question 7

___ are physical objects that can be purchased, such as food, clothing and furniture

Answer 7

Goods

Question 8

___ is work that one person performs for another for payment

Answer 8

Services

Question 9

___ is a person who buys goods or services for personal use

Answer 9

Consumer

Question 10

___ is a person who makes goods or provides services

Answer 10

Producer

Question 11

Scarcity requires 3 basic questions:

Answer 11

WHAT will be produced?
HOW will it be produced?
FOR WHOM will it be produced?

Question 12

___ are those resources needed to produce goods and services

Answer 12

Factors of Production

Question 13

Factors of production is divided into 4 categories:

Answer 13

Land
Labor
Capital
Entrepreneutship

Question 14

The 4 factors have what in common?

Answer 14

Limited Supply

Question 15

___ includes all the natural resources found on or under the ground that are used to produce goods and services

Answer 15

Land

Question 16

___ is all the human time, effort, and talent that goes into the making of products

Answer 16

Labor

Question 17

___ is all the producer’s physical resources

Answer 17

Capital

Question 18

Capital can also be known as ___ or ___

Answer 18

Physical Capital

Real Capital

Question 19

Businesses invest in ___

Answer 19

Real Capital

Question 20

Worker invest in ___

Answer 20

Human Capital

Question 21

___ is the combination of vision, skill, ingenuity, and willingness to take risks that are needed to create and run a new business

Answer 21

Entrepreneurship

Question 22

2 Factors that shape economic choices:

Answer 22

Incentives

Utilities

Question 23

___ is the benefit or satisfaction received from using a good or service

Answer 23

Utility

Question 24

to ___ means to make decisions according to the best combination of costs and benefits

Answer 24

Economize

Question 25

___ is the alterternative you give up when you make an economic choice

Answer 25

Trade-Off

Question 26

___ of a decision is the value of the next best alternative, or what you give up by choosing one alternative over another

Answer 26

Opportunity costs

Question 27

___ is the practice of examining the costs and benefits of a choe as an aid to decision making

Answer 27

Cost-Benefit Analysis

Question 28

___ shows what you would get and what you would give up when you make choices

Answer 28

The Decision Making Grid

Question 29

___ is the additional cost of using one or more unit of a product

Answer 29

Marginal Cost

Question 30

___ is the additional satisfaction from using one or more unit of a product

Answer 30

Marginal Benefit

Question 31

In Economics, when we think of ___ we are thinking on a per unit basis

Answer 31

Margin

Question 32

The ___ is a graph used by economists to show the impact of scarcity on an economy

Answer 32

PPF

Question 33

What does PPF stand for?

Answer 33

Production Possibilities Frontier

Question 34

The PPF is based on 4 assumptions that simplify economic interactions:

Answer 34

Resources are fixed
All resources are fully employed
Only 2 things can be produced
Technology is fixed

Question 35

___ is a latin phrase used in economics to mean all other things being held equal or constant.

Answer 35

Ceteris Paribusis

Question 36

The PPF represents the border between ___ and ___

Answer 36

Possible

Not Possible

Question 37

___ is the condition in which economic resources are not being used to produce the maximum amount of goods and services

Answer 37

Efficiency

Question 38

___ is the condition in which economic resources are not being used to their full potential

Answer 38

Underutilization

Question 39

___ states that as production switches from one product to another, increased amounts of resources are needed to increase the production of the second part

Answer 39

The Law of Increasing Opportunity Costs

Question 40

___ means you can’t get anymore of something

Answer 40

Fixed

Question 41

Anything that causes economic output to increase or decrease will cause the curve to ___

Answer 41

Shift

Question 42

Examples of outward shifts

Answer 42

Economic Growth

Technology

Question 43

Examples of inward shifts

Answer 43

Natural Disasters

War/Plague

Question 44

Technology replaces

Answer 44

Entrepreneurship