Basics of Economics

Question 1

Factors of Production

Answer 1

Land, Labor, Capital, Entrepreneurship

Question 2

Economic Systems

Answer 2

command economy, free-market economy, mixed economy

Question 3

physical capital

Answer 3

any human-made resource that is used to create another good/service

Question 4

human capital

Answer 4

any skills or knowledge gained by a worker through education and experience

Question 5

3 economic questions

Answer 5

what goods and services should be produced? how should these goods and services be produced? Who consumes these goods and services?

Question 6

command economy

Answer 6

the government owns all the resources and answers all the economic questions

Question 7

free market economy

Answer 7

little government intervention and guidance by a country’s citizens and businesses

Question 8

4 assumptions under PPC

Answer 8

only 2 goods can be produced, full employment of resources, fixed resources, fixed technology

Question 9

4 shifters of the PPC

Answer 9

change in the natural resource quantity or quality, change in technology, change in trade, change in availability/ quality of labor

Question 10

constant opportunity cost

Answer 10

resources are easily adaptable for producing either good

Question 11

increasing opportunity cost

Answer 11

goods use different materials

Question 12

5 key economic assumptions

Answer 12

society has unlimited wants and limited resources; due to scarcity, choices must be made and every choice has a cost; everyone’s goal is to make choices that maximize their satisfaction; everyone makes decisions by comparing the marginal costs and benefits; real-life situations can be explained and analyzed through simplified models and graphs