Chapter 3

Question 1

The study of how individuals and society choose to use scarce resources to produce goods and services and distribute them for consumption.

Answer 1

Economics

Question 2

Refers to what you give up (your next best choice) in order to do or get something else (your chosen decision).

Answer 2

Opportunity Cost

Question 3

A shortage of resourced created by limitation of quantity or cost.

Answer 3

Scarcity

Question 4

Land, Labor, Capital (money), entrepreneurship, knowledge, time.

Answer 4

Resources

Question 5

The study of the operation of a nation’s economy as a whole. Monetary policy, fiscal policy, unemployment, interest rates, and inflation.

Answer 5

Macroeconomics

Question 6

Father of Modern Economics

Answer 6

Adam Smith

Question 7

Wealth of the Nations 1776 is about?

Answer 7

Resources don’t have to be divided, simply create more resources. Still relevant today.

Question 8

What is known as as a individual trying to improve their own situation in life, and their efforts serve.

Answer 8

Invisible Hand Theory

Question 9

Consumers making decisions with their money determine the success or failure of a business.

Answer 9

Economic Man Model

Question 10

The quantity of products that producers are willing to sell at different prices at a specific time.

Answer 10

Supply

Question 11

As the price goes up, the quantity of that produced goes up.

Answer 11

Law of Supply

Question 12

Law of Supply is what type of relationship?

Answer 12

Direct Relationship

Question 13

The quantity of products that consumers are willing and able to buy at different prices at a specific time.

Answer 13

Demand

Question 14

As the price goes up, the quantity that consumers are willing to buy goes down.

Answer 14

Law of Demand

Question 15

Law of Demand is what type of relationship?

Answer 15

Inverse Relationship

Question 16

The point at which the amount of goods sought by buyers is equal to the amount of goods produced by suppliers.

Answer 16

Equilibrium Point

Question 17

A common, recurring pattern in which there is a period of rapid economic growth when supply and demand stimulate each other; alternating with a period of decline/recession with diminishing demand and supply.

Answer 17

Business Cycle

Question 18

A economic system in which all of most of the factors of production and distribution are privately owned and operated for profit.

Answer 18

Capitalism

Question 19

A system in which decisions about what to produce and in what quantities are made by the market.

Answer 19

Free Market

Question 20

A market condition in which a large number of businesses produce product that are very similar but are perceived by the buyer as different.

Answer 20

Monopolistic Competition

Question 21

An attempt to make buyers think similar products are different in some way.

Answer 21

Product Differentiation.

Question 22

A form of competition in which just a few businesses dominate a market.

Answer 22

Oligopoly

Question 23

A form of competition in which only one business controls the total supply of a product and its price.

Answer 23

Monopoly

Question 24

The removal of government control and strict oversight in the market that thereby opens the market for others to enter.

Answer 24

Deregulation

Question 25

An economic and political system in which states make almost all economic decisions and owns almost all the major factors of production including housing for its people. This is a command economy.

Answer 25

Communism

Question 26

An economic system based on the premise that some, if not most, basic business should be owned by the government so profits can be evenly distributed among the people.

Answer 26

Socialism

Question 27

Economic system in which some allocations of resources is made by the market and some by the government.

Answer 27

Mixed Economics

Question 28

The money the federal government spends over and above its revenue for a specific period of time.

Answer 28

National Deficit

Question 29

The some of government deficits over time.

Answer 29

National Debt