Flashcards in PreAP Economics and Choice Test Deck (20):
What is economics?
the study of how individuals and societies satisfy their unlimited wants and limited resources.
What is the difference between a need and a want?
-Needs are things needed for survival (food, water, clothing, shelter)
-Wants are desires that can be satisfied by consuming a good or service.
What is the difference between a good and a service?
-Goods are physical products businesses produce. (scissors, brush, TV)
-Services are activities performed that satisfy people's wants or needs. (hairdresser, teacher, mechanic)
What is the difference between a producer and a consumer?
-a Producer is one who makes goods or provides services. (hairdresser, teacher, TV company)
-a Consumer is one who purchases goods or services.
what is scarcity?
the result of an inability to satisfy unlimited wants with limited resources.
-fundamental and ongoing tension that confronts individuals, businesses, governments and societies
What does it take to be a successful entrepreneur?
a combination of vision, skill, ingenuity and willingness to take risks that is needed to create and run a new business.
What 3 questions must society ask when faced with scarcity?
1. What is being produced?
2. How will it be produced?
3. For whom will it be produced?
What are the 5 steps in the PACED decision making model?
P- define the Problem
A-list the Alternatives
C-detirmine the Criteria
E-Evaluate the alternatives
D-make the Decision
What is an opportunity cost?
the best alternative given up when making a choice
What are trade offs and incentives?
trade offs- a choice that involves giving up some of one thing to have more of another
incentives- the reasons for increasing profit, interest, wages and rent.
What is the Production Possibilities Curve?
a graph that shows the impact of scarcity on an economy.
What does a point on the curve represent?
the best use of resources
What does a point inside the curve represent?
a possible use of resources
What does a point outside the curve represent?
an IMpossible use of resources
What is the most important factor in making an economic decision?
What are the 4 factors of production?
Human, Capital, Natural and Entreprunial Resources
Describe Human resources
-includes time, effort, and talent that go into making products or services
Describe Capital Resources
-all resources made and used by people to produce and distribute goods and services
-includes tools, machinery, offices, warehouses, roads, factories, etc. (man-made)
-money is not a capital resource
Describe Natural Resources.
-all natural resources found on or under ground that are used to produce goods or services.
-includes water, forests. wildlife, minerals, gas, oil, etc.