Econ. Ch. 1

Question 1

Economics

Answer 1

The study of how people use limited resources to meet the unlimited wants of people.

Question 2

Scarcity

Answer 2

Scarcity occurs when there are limited quantities of resources to meet unlimited needs or desires.
(Always exists)

Question 3

Factors of Production

Answer 3

Land- uses resources to make goods
Labor- effort where someone is payed.
Capital- human made resources to create other goods and services.
Entrepreneur-a person who organizes and operates a business or businesses. (Greater financial risk.)

Question 4

Physical capital

Answer 4

Uses machines, tools, buildings.

Question 5

Human capital

Answer 5

Human capital uses knowledge, skills, education/experience

Question 6

Opportunity cost

Answer 6

Opportunity cost is the loss of an option when another is chosen.

Question 7

Trade-offs

Answer 7

All the alternatives of a solution

Question 8

Thinking at the margin

Answer 8

Thinking about how much more or less to do.

Question 9

Production Possibilities frontier (curve)

Answer 9

Shows alternate ways that economy can use its resources.

Question 10

Efficiency

Answer 10

Efficiency on the possibility graph shows that the resources are being used to their full potential.

Question 11

Under utilization

Answer 11

Under utilization is inside the possibility graph showing that it is not using resources efficiently.

Question 12

Economic growth

Answer 12

Is when resources become available, or technology improves, and the economy can increase its level of output and it grow in the economy.

Question 13

Law of increasing costs

Answer 13

Is a principle that states that once all factors of production land, labor, capital are at maximum output and efficiency, producing more will cost more than average.