module 1

Question 1

scarcity

Answer 1

exists when there is not enough of something (product/service/resource) to satisfy everyone’s wants, at a zero price.

Question 2

trade-offs

Answer 2

as a result of scarcity, you are forced to make trade-offs, which occur when you give up something to gain something else.

Question 3

opportunity cost

Answer 3

the value of the next best alternative other than the choice that was made.

Question 4

Production Possibilities Curve (PPC)

Answer 4

shows the maximum amount of output that can be made using the current amount of resources and stable technology.

Question 5

entrepreneurship

Answer 5

the activity of coming up with the idea and starting a business.

Question 6

marginal benefits

Answer 6

the additional benefits the results from taking an action.

Question 7

marginal costs

Answer 7

the additional costs that result from taking an action.

Question 8

economic capital

Answer 8

anything that is manufactured in order to be used in production of goods and services.

Question 9

capital

Answer 9

machinery and equipment (capital is not money)

Question 10

entrepreneur

Answer 10

someone who recognizes a profit opportunity, is able to organize the resources, and is willing to accept risk.

Question 11

choices and consequences

Answer 11

as a result of scarcity, people are forced to make choices every day, choices have consequences

Question 12

intended consequences

Answer 12

outcomes or results that are expected when a choice is made.

Question 13

unintended consequences

Answer 13

expected outcomes that arise due to a choice.

Question 14

positive unintended consequences

Answer 14

Choices made by individuals, businesses, and governments may have unintended consequences.
Unintended consequences can be positive when they result in unexpected benefits.

Question 15

give an example of a positive unintended consequence.

Answer 15

A positive unintended consequence of recess is that it can improve students’ attention.

Question 16

negative unintended consequences

Answer 16

Unintended consequences can be negative when they cause unexpected harm.

Question 17

give an example of a negative unintended consequence.

Answer 17

New York City’s policy of rent control has led in part to a shortage of apartments.

Question 18

potential consequences

Answer 18

When making decisions, it is important to consider all the potential consequences of your choices—intended or unintended.

Question 19

what is the PACED model?

Answer 19

The PACED decision-making model is a five-step procedure that provides a framework for making choices in our everyday lives.

Question 20

how many steps are in the PACED model?

Answer 20

5

Question 21

what does the P stand for in the PACED model?

Answer 21

P: Define the problem. What is that you need to decide?

Question 22

what does the A stand for in the PACED model?

Answer 22

A: List the alternatives that you can choose from.

Question 23

what does the C stand for in the PACED model?

Answer 23

C: List the criteria by which the choices will be evaluated.

Question 24

what does the E stand for in the PACED model?

Answer 24

E: Evaluate your choices, which one is best based on the criteria given. Give each alternative a plus (+) or a minus (-) according to how well it meets each criterion.

Question 25

what does the D stand for in the PACED model?

Answer 25

D: Make a decision based on the information available.

Question 26

incentives

Answer 26

things or ideas that are used to encourage or discourage people from making certain decisions or behaving a certain way.

Question 27

positive incentives

Answer 27

rewards or other enticement that encourages a specific type of behavior.

Question 28

negative incentives

Answer 28

penalties that discourage a certain type of behavior.

Question 29

incentive for consumers

Answer 29

low price

Question 30

incentive for producers

Answer 30

profit

Question 31

incentives for investors

Answer 31

capital gain

Question 32

incentives for savers

Answer 32

interest earned

Question 33

incentives for politicians

Answer 33

votes

Question 34

incentives for workers

Answer 34

pay and benefits

Question 35

what are the three basic economic questions?

Answer 35

what goods and services will be produced? how will these goods and services be produced? who will consume these goods and services?

Question 36

what is an economic system?

Answer 36

a way of allocating resources and distributing goods and services within a society

Question 37

how many major types of economic systems are there?

Answer 37

4

Question 38

what are the four major economic systems?

Answer 38

traditional economy, command economy, market economy, and mixed economy

Question 39

great economic problem

Answer 39

how to arrange our limited resources to satisfy as many of our wants as possible.

Question 40

traditional economy

Answer 40

answers the 3 economic questions by relying on culture and long-established practices. history, past actions, and culture determine the answers to the economic questions.

Question 41

market economy

Answer 41

answers the 3 economic questions by consumers “voting” with their dollars. consumers answer the economic questions by choosing which products and services to buy.

Question 42

command economy

Answer 42

answers the 3 economic questions by complete government control. the government answers the economic questions by dictating output and amount of production.

Question 43

mixed economy

Answer 43

answers the 3 economic questions through both consumer and government decisions. consumers and the government together determine the answers to the economic questions.

Question 44

individual and societal benefits of becoming an entrepreneur

Answer 44

Flexibility of your schedule Additional services offered to attract customers Lower prices in the market due to competition

Question 45

role of entrepreneurs

Answer 45

Create new net wealth Create jobs Birth new ideas through innovation

Question 46

entrepreneur

Answer 46

someone who introduces new products, services, and production methods in hopes of making profit.

Question 47

risks

Answer 47

entrepreneurs accept the risks associated with their new ventures with the hope that they will be successful.

Question 48

profit

Answer 48

entrepreneurs respond to the incentive of profit. Their ideas for new products, services, and processes will be rewarded with profit if they are successful.

Question 49

competition, progress, and growth

Answer 49

by providing new products, services, and processes, entrepreneurs increase competition and encourage technological progress and economic growth.

Question 50

specialization benefits

Answer 50

takes advantage of differences in ability, fosters learning by doing, saves time, increases productivity

Question 51

Adam smith's economic theories

Answer 51

Self-interest Trade Competition Specialization

Question 52

self-interest

Answer 52

people acting in their own self-interest, would work hard and produce what consumers want as if directed by an invisible hand.

Question 53

trade

Answer 53

opens new markets where surplus goods can be sold and allows for cheaper goods to be imported.

Question 54

competition

Answer 54

competition among businesses will keep prices in check and increase the quality of goods being sold.

Question 55

specialization

Answer 55

specialization and division of labor allow workers to produce greater output than if each worker works alone.

Question 56

consumer sovereignty

Answer 56

exists as consumers “vote” with their dollars for their most preferred products and services.

Question 57

profit motive

Answer 57

businesses have an incentive to produce what consumers want and to keep their production costs down so as to maximize profits.

Question 58

limited government intervention

Answer 58

serving only to protect consumers in the marketplace.