C-2

Question 1

goods

Answer 1

physical objects produced for sale

Question 2

services

Answer 2

work done by someone else for which a consumer, business, or government is willing to pay.

Question 3

shortage

Answer 3

lack of something desired, a condition that occur when there is little less of goods and services available than people want at the current price

Question 4

factors of production

Answer 4

the resources used to produce goods and services

Question 5

capital

Answer 5

the tools, machines, and buildings used in the production of other goods and services

Question 6

productivity

Answer 6

the measure of efficiency of with which goods and services are produced

Question 7

opportunity cost

Answer 7

the value of the next best alternative that is given up a choice

Question 8

production possibilities frontier (PPF)

Answer 8

a simple economic model that shows how an economy might use its resources to produce two goods

Question 9

production possibilities curve

Answer 9

a sloping line on the graph measuring data

Question 10

inputs

Answer 10

the scarce resources that go into the production process

Question 11

outputs

Answer 11

the goods and services produced from the resources

Question 12

production equation

Answer 12

combining resources to produce goods and services

Question 13

entrepreneurship

Answer 13

the willingness to take a risk involved in starting and managing a business

Question 14

entrepreneurs

Answer 14

assemble the other inputs to create new goods and services

Question 15

perpetual resources

Answer 15

natural resources that can be used without any danger of running out; sunlight, air

Question 16

land

Answer 16

a part of earth’s surface that is able to produce natural resources

Question 17

renewable resources

Answer 17

limited resources

Question 18

non-renewable resources

Answer 18

resources that can be recycled for repeated uses

Question 19

human capital

Answer 19

the knowledge and skill that people gain from education, on-the-job training, and other experiences

Question 20

labor

Answer 20

the time and effort people put devote to producing goods and services in exchange for wages

Question 21

correlation

Answer 21

the relationship between a country’s level of human capital and its standard of living

Question 22

financial capital

Answer 22

money that can be invested in stocks, bonds, real estate, or businesses to produce future wealth

Question 23

utility

Answer 23

satisfaction or pleasure one gain from consuming a product or from taking an action

Question 24

marginal utility

Answer 24

extra satisfaction or pleasure one gain from consuming a product or from taking an action

Question 25

negative utility

Answer 25

lack of satisfaction or pleasure

Question 26

physical capital

Answer 26

the tools, machines, and buildings to produce goods and services

Question 27

law of diminishing marginal utility

Answer 27

the more we consume of something, the less satisfaction we will get from each additional unit of it

Question 28

economic efficiency

Answer 28

the result of using resources in a way that produces the maximum amount of goods and services