Chapter 1 vocab

Question 1

Something like air, food, or shelter that is necessary for survival

Answer 1

Need

Question 2

An item that we desire but that is not essential to survival

Answer 2

Want

Question 3

The study of how people seek to satisfy their needs and wants by making choices

Answer 3

Economics

Question 4

Physical objects such as clothes or shoes

Answer 4

Goods

Question 5

Actions or activities that one person performs for another

Answer 5

Services

Question 6

Limited quantities of resources to meet unlimited wants

Answer 6

Scarcity

Question 7

A situation in which a good or service is unavailable

Answer 7

Shortage

Question 8

Land, labor, and capital; the three groups of resources that are used to make all goods and services

Answer 8

Factors of production

Question 9

Natural resources that are used to make goods and services

Answer 9

Land

Question 10

The effort that people devote to a task for which they are paid

Answer 10

Labor

Question 11

Any human made resource that is used to create other goods and services

Answer 11

Capital

Question 12

All human made goods that are used to produce other goods and services, tools and buildings

Answer 12

Physical capital

Question 13

The skills and knowledge gained by a worker through education and experience

Answer 13

Human capital

Question 14

Ambitious leaders who combines land, labor, and capital to create and market new goods and services

Answer 14

Entrepreneur

Question 15

An alternative that we sacrifice when we make a decision

Answer 15

Trade off

Question 16

A phrase that refers to the trade offs that nations face when choosing whether to produce more or less military or consumer goods

Answer 16

Guns or butter

Question 17

The most desirable alternative given up as the result of a decision

Answer 17

Opportunity cost

Question 18

A graph that shows alternative ways to use an economy’s resources

Answer 18

Production possibilities curve

Question 19

The line on a production possibilities graph that shows the maximum possible output

Answer 19

Production possibilities frontier

Question 20

Using resources in such a way as to maximize the production of goods and services

Answer 20

Efficiency

Question 21

Using fewer resources than an economy is capable of using

Answer 21

Underutilization

Question 22

The alternative that is given up because of a decision

Answer 22

Cost

Question 23

As we shift factors of production from making one good or service to another, the cost of producing the second item increases

Answer 23

Law of increasing costs