Chapter 1

Question 1

Scarcity

Answer 1

The inability to get what we want

Question 2

Incentive

Answer 2

Reward that encourages action or penalty that discourages one

Question 3

Economics

Answer 3

Social science that studies choices individuals, business, governments, societies make as they cope with scarcity and incentives that influence and reconcile these choices

Question 4

The 2 big economic questions

Answer 4

How do choices end up determining what, how, and for whom goods and services are produced?

Do choices made in the pursuit of self interest also promote the social interest?

Question 5

Factors of Production

Answer 5

Resources used to produce goods and services

Land

Labour

Capital

Entrepreneurship

Question 6

Land

Answer 6

Gifts of nature used to produce goods and services, land is natural resources including minerals, oils, gas, coal, water, air, forest, and fish

Question 7

Labour

Answer 7

Effort and time people devote to producing goods and services. Includes mental and physical

Question 8

Capital

Answer 8

All materials used to produce goods and services

Question 8

What the factors of production earn

Answer 8

Land earns rent

Labour earns wages

Capital earns interest

Entrepreneurship earns profi

Question 8

Human capital

Answer 8

Quality of labour is depended on this.

Knowledge and skill people obtain from education, experience, and training.

Question 9

Entrepreneurship

Answer 9

Human resource that organizes land, labour, and capital drivers of the economic progress

Question 10

Social interest

Answer 10

The choice that is best for society as a whole

Question 10

Efficient

Answer 10

If it is not possible to make someone better off without making someone worse off

Question 10

Self interest

Answer 10

Choice that you think is best for you

Question 11

6 Economic ways of thinking

Answer 11

A choice is a tradeoff

People make rational choices by comparing benefit and costs

Benefit is what you gain

Cost is what you must give up to get something

Most choices are how much choices made at margin

Choices respond to incentive

Question 12

Globalization

Answer 12

Expansion of international trade

In self interest of those consumers who b uy low cost goods and services produced in other countries.

Question 13

Trade off

Answer 13

Exchange giving up 1 thing to get something else

Question 14

Rational choice

Answer 14

Compares costs and benefits and achieves greatest benefit over cost

Question 15

Opportunity cost

Answer 15

Highest valued alternative that must be given up to get it

Question 16

Margin

Answer 16

When a choice is made by comparing a little more of something with its cost. The choice is made at the margin