Econ unit 1

Question 1

goods

Answer 1

a real tangible item that has a use and satisfies a want (ex. food)

Question 2

services

Answer 2

work that is performed by someone (ex. job)

Question 3

4 factors of production

Answer 3

land, labor, capital, entrepreneurship

Question 4

3 Fundamental questions of economics

Answer 4

what will be produced?
how will it be produced?
how will output society produces be distributed?

Question 5

what is economics and why do we study it

Answer 5

study of choices that we and the government make. helps people become better decision makers, understand how our economy works, make informed decisions about political leaders

Question 6

microeconomics

Answer 6

the part of economics concerned with single factors and effects of individual decisions

Question 6

paradox of value

Answer 6

prices for goods are based on marginal utility rather than total utility (water is more useful than diamonds, but we’d spend more on diamonds)

Question 7

purpose of circular flow diagram

Answer 7

shows exchange of money for goods and services in our economy

Question 8

scarcity and how it impacts lives

Answer 8

when society doesn’t have enough resources to produce what we want. causes high prices for things and people to not always have the goods they want

Question 9

opportunity cost and how it’s measured

Answer 9

your next best option when making a choice. measured by productions possibilities curve frontier

Question 10

economic system

Answer 10

the way in which a society provides for the wants and needs of its people

Question 11

traditional economy

Answer 11

allocation of scarce resources and other economic activities are based on ritual, habit, or custom (ex. tribal or indigenous)

Question 12

command economy

Answer 12

central authority(government/leader) makes all economic decisions (ex. North Korea)

Question 13

market economy

Answer 13

supply and demand determines what is produced (ex. U.S)

Question 14

role of government in a command economy

Answer 14

decide what, how, and for whom to produce for. And decided about products and what people need

Question 15

role of consumers in American free enterprise

Answer 15

rule the economy, business make what consumers want and if they can’t then they die

Question 16

role of entrepreneurs in American free enterprise

Answer 16

the spark, give cheaper/high quality jobs

Question 17

role of government in American free enterprise

Answer 17

protector, provider, and regulator, oversees industries, and gives roads/schools/parks etc.

Question 18

3 main goals of economic system

Answer 18

stable prices, low unemployment, economic growth

Question 19

capitalism

Answer 19

private citizens and businesses own/use factors of production

Question 20

socialism

Answer 20

government owns and controls some of the factors of production

Question 21

communism

Answer 21

all factors of production are “collectively” owned and controlled by the government

Question 22

benefits and drawbacks of sole proprietorship

Answer 22

(+) owner receives all profits, only once are profits taxed, (-) unlimited liability, less legal protection

Question 23

benefits and drawbacks of partnership

Answer 23

(+) both partners have equal responsibility/liability, (-) profits shared with everyone

Question 24

benefits and drawbacks of corporation

Answer 24

(+) protected by law, limited liability, (-) more expensive, double taxation, need protection by law

Question 25

2 types of mergers

Answer 25

vertical: firms that are involved in different stages of production
horizontal: firms that produce same products join up

Question 26

multinational coporation

Answer 26

company that has operations throughout the world (ex. apple)