Basic Economic Concepts

Question 1

Economics
Scarcity
(forces people to?)

Answer 1

study of how people satisfy their needs/wants by making choices
limited amount of goods/services available to meet unlimited wants
(make choices)

Question 2

Good vs. Service
Production Possibilities Curve
above curve:
under curve:
on curve:

Answer 2

product vs. an act carried out
illustrates trade-offs associated w/ allocating resources b/w production of 2 goods
not feasible
inefficient use of resources
effiecient use of resources

Question 3

Factors of Production (3)?
L ? (2 ex)
L ? (2 ex)
C ? (ex) 2 different ones

Answer 3

land, labor, Physical/ Human capital
natural resources used to produce goods/services (oil, water)
effort people devote to tasks to get paid (doctor, chef)
human-made resources used to produce goods/services

Question 4

Trade-Off
(3 types)? and definition of each

Answer 4

giving up 1 benefit for a greater one
individual: going to a concert and missing school
business: target trade’s one brand for another
Gov’t: social contract

Question 5

Opportunity Cost
(ex)

Answer 5

desirable alt. someone gives up bc. of a decision
The opportunity cost of choosing in n out over raising cane’s is no texas toast.

Question 6

Specialization
Absolute Advantage
Comparative Advantage

Answer 6

each person specializes in a task they are good at
someone can produce more of a good than another with the same resources
someone can produce a good at a lower opportunity cost than others

Question 7

shifts of the production possibilities curve
(aka?)

Answer 7

increase in resources (factors of prod.)
technology

Question 8

price ceilings and price floors
lead to (4)

Answer 8

the gov’t states a price cant go above/below a certain amount

inefficient allocation of resources
wasted resources
low quality
black markets