Econ Unit 1

Question 1

What are goods?

Answer 1

Goods are real tangible items that have use and satisfy a want. Examples: Pencils, papers, and toys

Question 2

What are services?

Answer 2

Work that someone performs. Examples: Therapy sessions, babysitting, and surgery.

Question 3

What are the 4 factors of production?

Answer 3

Land, Labor, capital, and Entrepreneurship

Question 4

What are the 3 fundamental questions of economics?

Answer 4

1. What goods and services should be produced to meet consumers’ needs?
2. How should they be produced, and who should produce them?
3. Who should receive goods and services?

Question 5

What is economics?

Answer 5

It’s a social science with stakes in many other fields and the study of scarcity and its implication for the use of resources, production of goods and services.

Question 6

Why do we study economics?

Answer 6

We study it to determine the most logical and effective use of resources to meet private and social goals.

Question 7

What is microeconomies?

Answer 7

It’s the part of economics concerned with single factors and the effects of individual decisions.

Question 8

What is the “paradox of value”?

Answer 8

The contradiction is that although a necessity (such as water) is more useful for survival, and luxury goods have a higher market price.

Question 9

What is the purpose of the Circular Flow Diagram?

Answer 9

The basic purpose of the circular flow diagram is to understand how money moves within an economy.

Question 10

What is scarcity?

Answer 10

it’s limited goods or services that people desire to satisfy their needs.

Question 11

How does scarcity impact our lives?

Answer 11

It influences the free market through supply and demand, leading to inflammation and raised prices.

Question 12

What is opportunity cost? How is it measured?

Answer 12

It’s the loss of potential gain from other alternatives when one alternative is chosen. Can be measured on an opportunity cost graph.

Question 13

What is an economic system?

Answer 13

When societies of governments organize and distribute available resources, services, and goods across a geographic region or country.

Question 14

Traditional economy

Answer 14

Customs and traditions are more important than money. Example: Tribes in brazil.

Question 15

Command economy

Answer 15

Production, investment, prices, and incomes, are determined centrally by a government . Examples: Cuba, North Korea, Nazi Germany

Question 16

Market economy

Answer 16

An economic system where two forces, known as supply and demand, direct the production of goods and services. Examples: United States, Japan, UK

Question 17

What is the role of the government in a command economy?

Answer 17

The government controls and steers major aspects of economic production. They decide the means of production and own the industries.

Question 18

What role do entrepreneurs play in American free enterprise?

Answer 18

They spark free enterprise, provide jobs, provide cheaper and higher quality goods, and seek out risks and profits.

Question 19

What role do consumers play in American free enterprise?

Answer 19

Consumer sovereignty: consumers rule the economy if they don’t like a product then they don’t have to buy it, forcing businesses to innovate and develop new products.

Question 20

What role does the government play in American free enterprise?

Answer 20

It protects, provides, and regulates American free enterprise.

Question 21

What are the three main goals of an economic system?

Answer 21

STABLE PRICES; Prevents inflammation
LOW UNEMPLOYMENT: The more people are employed, the better they can support themselves.
ECONOMIC GROWTH: The economy must grow to satisfy our changing needs and wants.

Question 22

What is capitalism?

Answer 22

An economic system where private citizens and businesses own and use the factors of production.

Question 23

What is socialism?

Answer 23

Political and economic systems where the government owns and controls some of the factors of production.

Question 24

What is communism?

Answer 24

A political and economic system in which all the factors of production are collectively owned and controlled by the government.

Question 25

What is a sole proprietorship? What are the pros and cons?

Answer 25

One-person business, is the most basic form of business.
PRO: No need to file separate taxes, no partners
CON: Responsible for debt, less likely to get loans

Question 26

What are partnerships? What are the pros and cons?

Answer 26

A business that has or more co-owners with a partnership agreement.
PRO: Easy to structure a business, less paperwork
CON: Responsible for debt, personal disagreements can destroy the company.

Question 27

What is a corporation? What are the pros and cons?

Answer 27

A business entity that exists independently of its owners reduces the owner’s liability risk.
PRO: Banks are more willing when giving loans, and can exist even when owners leave.
CON: Double taxation, more paperwork, IRS watching closely

Question 28

What are the two types of mergers that can happen with businesses?

Answer 28

Horizontal Merger: Competing companies merge, they sell the same products: t-mobile and Sprint.
Vertical Merger: A merger of companies with different products, they sell different products: AT&T and Legos

Question 29

What is a multinational corporation?

Answer 29

A company that operates in its home country, as well as in other countries around the world. Example: Toyota.

Question 30

(Test question) Doctor’s Office and law firms are examples of…

Answer 30

A partnership