Test 1

Question 1

The basic economic problem

Answer 1

Scarcity: unlimited wants and needs but only limited resources to satisfy them

Question 2

Goal of economic decision-making

Answer 2

Most efficient allocation (way of using) of scarce resources to produce goods

Question 3

Land

Answer 3

Natural resources (soil, oil, timber, etc.)

Question 4

Labor

Answer 4

Effort devoted to your tasks to get paid for your efforts

Question 5

Human Capital

Answer 5

Knowledge and skills a worker obtains

Question 6

Physical Capital

Answer 6

Human-made objects that are used to create other objects (building, machine on assembly line, hammer, screw driver)

Question 7

Entrepreneur

Answer 7

Combines land, labor, and capital to make a good or service

Question 8

Capitalist/market economy

Answer 8

The goal is for entrepreneurs to invent new things to make a profit

Question 9

Free good

Answer 9

Things like air

Question 10

Need

Answer 10

Something necessary for survival (air, food, water, shelter)

Question 10

Economic good

Answer 10

Air during scuba diving, going to outer space (free goods can turn into economic good)

Question 11

Want

Answer 11

Item we desire but don’t need for survival (new phone, new car)

Question 12

Scarcity

Answer 12

ALWAYS EXISTS because needs and wants are always greater than the resource supply

Question 13

Opportunity cost

Answer 13

The most desirable alternative that you give up

Question 14

Resources

Answer 14

Raw materials that go into making a product

Question 15

Shortage

Answer 15

Can be temporary; not having enough product for everyone (ice tea example)

Question 15

Trade-off

Answer 15

All alternatives that we give up when we choose one course of action over another

Question 15

Production possibilities frontier

Answer 15

Same thing curve (Line on the graph any point)

Question 16

Production possibilities schedule

Answer 16

Chart - (If I can make 40 guns, 0 butter / 30 guns, 10 butter/ 20 guns, 40 butter)

Question 17

Production possibilities curve

Answer 17

Same thing curve (Line on the graph any point)

Question 18

Economic growth

Answer 18

Shown by a shift to the right

Question 19

Underutilization

Answer 19

Any point inside the graph - Not maximizing the use of your resources not maximizing your production

Question 20

Law of increasing costs

Answer 20

As you shift production from one item to another, it will cost you more to make that other item (Don’t look at cost look at how much you are giving up)

Question 21

Opportunity cost

Answer 21

You have to give up more (shoes) to make more (watermelon) (Costing more - opportunity cost increasing)

Question 22

Thinking at the margin

Answer 22

How much more of something can you do or give up (can you sleep 5 more min and still make it to school on time)