Ch.1

Question 1

economics

Answer 1

the study of the choices that individuals and societies make in the production, distribution, and consumption of goods

Question 2

economy

Answer 2

any system for the production, distribution, and consumption of goods and services

Question 3

economic models

Answer 3

a theory which seeks to show the relationships between various components of an economy

Question 4

goods

Answer 4

tangible items people want and for which they will pay

Question 5

service

Answer 5

intangible goods produced by labor and for which people expect to pay

Question 6

want

Answer 6

the human desire to possess or use a certain good or service

Question 7

market

Answer 7

a mechanism that allows people to exchange goods

Question 8

supply

Answer 8

the relationship between a goods price and the amount the producers are willing to suplly

Question 9

demand

Answer 9

the relationship between a good’s price and the quantity people are willing to by

Question 10

consumer

Answer 10

an individual who uses goods

Question 11

producer

Answer 11

a person who works to provide goods

Question 12

value

Answer 12

the worth that consumers attach to a good

Question 13

understanding economic helps to

Answer 13

1. manage personal and economic affairs based on God’s word
2. wisely manage household incomes and have a good standard of living for ourselves and our families
3. run a business or maintain a profession
4. intelligently save money
5. know a government’s functions
6. choose economically sensible political leaders
7. understand how we are all affected by nationwide and worldwide economic policies

Question 14

the pilgrims

Answer 14

first economic plan “common course and condition” (communism) then switched to private enterprise. they found they worked harder when it was for themselves rather than other people.

Question 15

economist

Answer 15

a scholar of the production, distribution, and consumption of goods within economic systems

Question 16

economic forecast

Answer 16

a prediction, based upon past observations and current trends, of what will happen in an economy in the future

Question 17

macroeconomics

Answer 17

the study of national and international economies and how these major economies are affected by large-scale choices and public policies

Question 18

microeconomics

Answer 18

the study of specific components within a major economy and how the choices made by individuals, households, and businesses affect that economy

Question 19

mass market

Answer 19

a large number of people to whom large quantities of products are sold

Question 20

all goods

Answer 20

have to be worked for and have limited supply

Question 21

almost everyone, most everyone

Answer 21

producer, consumer

Question 22

the story of the prodigal

Answer 22

when you spend more than you can afford you will face consequences

Question 23

The Vision of Sir Launfal

Answer 23

people spend majority of their time producing and consuming because everything has a price

Question 24

need

Answer 24

a necessity; something difficult to live without

Question 25

capital goods

Answer 25

a tool or resource used to produce or distribute goods; a good that is not produced for direct use by end consumers

Question 26

consumer goods

Answer 26

an item produced for direct use by consumers

Question 27

modern technology

Answer 27

the industrial skills and scientific methods that can make efficient production possibe

Question 28

value depends on

Answer 28

a good’s scarcity and utility rather than the amount of labor necessary to create the good

Question 29

Carl Menger

Answer 29

Lived: 1840-1921
Major publications: The Principles of Economics;
Major contributions: founder of the Austrian School of Economics; Diamond-Water Paradox- why are diamonds for valuable than water which is needed to survive? if water is abundant, the diamond is more valuable bc of its scarcity. if water is scarce then its more valuable bc its more useful.