Chapter 1

Question 1

Economics

Answer 1

How people use scarce resources to satisfy unlimited wants

Question 2

Resources

Answer 2

Inputs to production

• labor
• capital
• natural resources
• entrepreneurial ability

Question 3

Labor

Answer 3

Physical/mental effort used to produce goods and services

Question 4

Capital

Answer 4

Buildings, equipment, and human skills used to produce goods and services

Question 5

Natural Resources

Answer 5

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Question 6

Entrepreneurial Ability

Answer 6

Ability to organize production and make dollas off of it

Question 7

Wages

Answer 7

Payment for labor

Question 8

Interest

Answer 8

Payment to resource owners for the use of their capital

Question 9

Profit

Answer 9

Sales-resource cost

Question 10

Product Market

Answer 10

A market in which a good or service is bought and sold

Question 11

Resource Market

Answer 11

A Market in which a resource is bought and sold

Question 12

Positive statement

Answer 12

Factual

Question 13

Normative Statement

Answer 13

Opinion

Question 14

Causation is not ________

Answer 14

Association

Question 15

Fallacy of composition

Answer 15

Incorrect belief that what is true for the individual, or part, is true for the whole

Question 16

Secondary Effects

Answer 16

Unintended consequences of economic actions