1-4

Question 1

economics

Answer 1

The study of how people choose to use their limited resources to satisfy their unlimited wants.

Question 2

economy

Answer 2

A system used to manage limited resources for the production; distribution; and consumption of goods and services.

Question 3

positive economics

Answer 3

The branch of economics that uses objective analysis to find out how the world works.

Question 4

normative economics

Answer 4

The branch of economics that applies value judgments to data in order to recommend actions or policies.

Question 5

scarcity

Answer 5

The condition that results because people have limited resources but unlimited wants.

Question 6

tradeoff

Answer 6

The exchange of one benefit or advantage for another that is thought to be better.

Question 7

cost-benefit analysis

Answer 7

A way to compare the costs of an action with the benefits of that action.

Question 8

incentive

Answer 8

Any factor that encourages or motivates a person to do something.

Question 9

specialization

Answer 9

The special line of work you have adopted as your career

Question 10

division of labor

Answer 10

Division of work into a number of separate tasks to be performed by different workers

Question 11

barter

Answer 11

To exchange goods or services without the use of money

Question 12

voluntary exchange

Answer 12

The act of buyers and sellers freely and willingly engaging in market transactions

Question 13

money

Answer 13

Anything that serves as a medium of exchange; a unit of account; and a store of value

Question 14

economic interdependence

Answer 14

Economic activities in one part of the country or world affect what happens elsewhere

Question 15

absolute advantage

Answer 15

The ability of an individual; a firm; or a country to produce more of a good or service than competitors; using the same amount of resources

Question 16

comparative advantage

Answer 16

The ability to produce a good at a lower opportunity cost than another producer

Question 17

economic equity

Answer 17

The attempt to balance an economic policy so that everyone benefits fairly

Question 18

economic system

Answer 18

The system of production and distribution and consumption

Question 19

traditional economy

Answer 19

An economy in which production is based on customs and traditions and economic roles are typically passed down from one generation to the next.

Question 20

command economy

Answer 20

An economic system in which the government controls a country’s economy.

Question 21

market economy

Answer 21

An economy that relies chiefly on market forces to allocate goods and resources and to determine prices

Question 22

factor payment

Answer 22

The income people receive in return for supplying factors of production

Question 23

mixed economy

Answer 23

An economy in which private enterprise exists in combination with a considerable amount of government regulation and promotion

Question 24

free enterprise system

Answer 24

An economic system in which individuals depend on supply and demand and the profit margin to determine what to produce; how to produce; how much to produce; and for whom to produce. The quest for improvement financially and materially motivates consumers and producers.

Question 25

goods

Answer 25

Tangible products that we use to satisfy our wants and needs

Question 26

services

Answer 26

Activities that are consumed at the same time they are produced

Question 27

factors of production

Answer 27

Land; labor; and capital; the three groups of resources that are used to make all goods and services

Question 28

entrepreneurship

Answer 28

The process of starting; organizing; managing; and assuming the responsibility for a business

Question 29

capital

Answer 29

Wealth in the form of money or property owned by a person or business and human resources of economic value

Question 30

productivity

Answer 30

The ratio of the quantity and quality of units produced to the labor per unit of time (economics)

Question 31

opportunity cost

Answer 31

The most desirable alternative given up as the result of a decision

Question 32

production possibilities frontier (PPF)

Answer 32

A curve showing the maximum attainable combinations of two products that may be produced with available resources and current technology