Unit 5

Question 1

What are some choices that Americans can make?

Answer 1

What to wear, what to eat, were to work, who to elect, whether or not they believe in God, whether to be happy or not, how they treat people

Question 2

Do we have a responsibility to make choices?

Answer 2

yes

Question 3

What are some suggestions for making good choices?

Answer 3

1. Seek God’s will
2. Choose what will bless others the most
3. Choose what will be best in the long run
4. get wise counsel
5. pray

Question 4

What is one consequence of making bad choices?

Answer 4

It is harder to make good choices

Question 5

How does the significance of the choices we make change as we get older?

Answer 5

They have more significance as we get older

Question 6

Choices often have what consequences?

Answer 6

unintended

Question 7

Did John Fund expect to see a trend toward a greater dependence on the government or toward reassertion of individual rights and freedoms?

Answer 7

toward reassertion

Question 8

What was the comment by the East German girl on how she expected the government would always treat them?

Answer 8

They would always treat them like children

Question 9

What can one learn from a trip to the ruins of the Berlin Wall?

Answer 9

that governments never give up power voluntarily

Question 10

What are 3 basic economic questions that people in a society decide?

Answer 10

1. What goods and services will be produced and in what quantities?
2. How will the goods and services be produced?
3. How will the goods and services be distributed across the population

Question 11

Why do people have to make economic choices?

Answer 11

Because of limited resources

Question 12

In what ways do people act that they do not want to admit scarcity?

Answer 12

1. They believe that there is enough for everyone
2. They do not believe that there is no room for new businesses
3. People ignore making economic decisions and buy more things with debt

Question 13

What are the consequences of believing in an unlimited pie?

Answer 13

It can motivate people to produce new goods and services and it can make people go into debt

Question 14

What is a cost-benefit analysis?

Answer 14

determining if the benefit of taking a step is worth the cost

Question 15

What are examples of cost-benefit analysis by an individual, business, and government?

Answer 15

Individual - Is the cost of eating a candy bar worth the benefit?
Business - I the cost of advertising worth the benefit?
Government - Is the cost of building a bigger library worth the benefit?

Question 16

What is an economic margin?

Answer 16

A small step that makes a big difference in an action that is being taken

Question 17

Why is the study of margins important?

Answer 17

Because that is where important economic decisions are made

Question 18

What is a marginal benefit?

Answer 18

The change in total benefit that results from an action

Question 19

What is a marginal cost?

Answer 19

The change in total cost that results from an action

Question 20

What are goods and services?

Answer 20

Goods are tangible items that are produced for consumption. Services are tangible duties that are performed for pay

Question 21

What are production resources?

Answer 21

Factors of production, elements that producers use to create goods and services, material and human resources, capital.

Question 22

What is the economic definition of capital?

Answer 22

The materials used to produce goods

Question 23

What are the production possibilities?

Answer 23

The maximum production that an economy can have given it’s production resources

Question 24

What is opportunity cost?

Answer 24

The greatest benefit that is given up when a choice is made

Question 25

What is economy of scale?

Answer 25

When the average total cost per item decreases as the number of units produced increases

Question 26

Steve Forbes says that Capitalism is a moral system because it is based on what?

Answer 26

trust

Question 27

What does it mean to say that capitalism is a bottom-up and not top-down economic system?

Answer 27

It is not mandated and centrally planned; it operates through individuals taking risks

Question 28

In what area of the economy does Forbes say that managed competition has been tried and failed?

Answer 28

Health care

Question 29

What percentage of economic activity in the U.S. consists of personal consumption?

Answer 29

70%

Question 30

What is an economic incentive?

Answer 30

A benefit that motivates action

Question 31

Name 2 common incentives for consumers

Answer 31

Reduced prices and subsidies

Question 32

What is an unintended consequence?

Answer 32

A result of an action that was not anticipated and is usually negative

Question 33

What is a substitution good?

Answer 33

An alternative to the item that the consumer would otherwise buy

Question 34

What is consumer choice theory?

Answer 34

It examines how consumers decide what to buy

Question 35

What does utility mean in economics?

Answer 35

satisfaction

Question 36

What is the law of diminishing marginal utility?

Answer 36

As more of an item is consumed, each unit has less value to the consumer, to the point at which one more unit provides no utility

Question 37

What are some aspects of cost-benefit analysis involved in making a decision about going to college?

Answer 37

Costs - financial cost, opportunity cost of not having a full-time job during that time, may be compromises in spiritual principles Benefits - college graduates have more stable jobs and more opportunities, may gain a broader view of the world, may gain friends

Question 38

What are some trade-offs involved in the decision about going to college?

Answer 38

Less income now for more income later, if you don't go to college right after high school, it may be harder later on or it may give you more motivation, if you work and save money you could start your own business.

Question 39

How do capitalism and socialism differ in terms of who makes economic decisions?

Answer 39

In Capitalism millions of people who buy and sell make the decisions and socialism government officials make the decisions

Question 40

Define economic efficiency

Answer 40

The goal of having the people in an economy being as productive as possible in making goods and services

Question 41

Define economic equity

Answer 41

the goal of having goods and services shared as equally as possible among the people in a society

Question 42

Define economic freedom

Answer 42

The goal of allowing people to buy and sell whatever they want in an economy

Question 43

Define economic security

Answer 43

Being sure that everyone his what they need (jobs, healthcare, necessities, and cannot fall roo far

Question 44

Define economic stability

Answer 44

Protection from fluctuation in econo9mic activity from serious loss

Question 45

What are some incentives that government can offer?

Answer 45

1. they can forgo collecting property or business tax for a few years 2. build new roads 3. allowing homeowners to deduct from their taxable income the interest they pay on a name mortgage loan 4, provide benefits to attract business

Question 46

How can government be involved in the allocation of goods and services?

Answer 46

redistribution of wealth through taxes

Question 47

Public choice applies to what other field?

Answer 47

Political science

Question 48

According to public choice theory, what is the basic motivation for voters of elected government officials?

Answer 48

Self interest