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Economics Test 1 Flashcards

1
Q

Consumers have two basic desires:

A

Wants

Needs

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2
Q

What are desires that can be satisfied by consuming a good or service?

A

Wants

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3
Q

What are things such as food, clothing, and shelter, that are necessary for survival?

A

Needs

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4
Q

What is the situation that exists when there are not enough resources to meet human wants?

A

Scarcity

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5
Q

What is the study of how people choose to use scarce resources to satisfy their wants?

A

economics

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6
Q

What are 4 examples of needs?

A

food
shelter
clothes
medicine

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7
Q

What 3 things do economics involve?

A
  1. examining how individuals, business, governments, and societies choose to use scarce resources to satisfy their wants
  2. Organizing, Analyzing, and interpreting data about those economic behaviors
  3. Developing theories and economic laws that explain how the economy works and to predict what might happen in the future
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8
Q

What is central to the use of scarce resources?

A

Choice

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9
Q

What affects which goods are made and which services are provided?

A

Scarcity

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10
Q

What are physical objects that can be purchased, such as food, clothing, and furniture?

A

Goods

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11
Q

What is work that one person performs for another for payment called?

A

services

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12
Q

Who is person who buys goods or services for personal use?

A

Consumer

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13
Q

Who is a person who makes goods or produces services?

A

Producer

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14
Q

What requires every society to address 3 basic economic questions?

A

Scarcity

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15
Q

What are the 3 economic questions?

A
  • What will be produced?
  • How will it be produced?
  • For whom will it be produced?
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16
Q

The first fundamental economic question involves not only what to produce, but also what?

A

How much to produce

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17
Q

Once how much to produce is decided, a society must then decide exactly what?

A

how they are going to get those goods and services to people

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18
Q

What are the resources needed to produce goods and services?

A

Factors of production

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19
Q

Factors of production into 4 broad categories:

A

land
labor
capital
entrepreneurship

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20
Q

All the four factors have one thing in common:

A

their supply is limited

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21
Q

What includes all the natural resources found on or under the ground that are used to produce goods and services? (oil, gold, animals)

A

Land

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22
Q

What is all the human time, effort, and talent that go into the making of products? (workers on an assembly line)

A

Labor

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23
Q

What is all the resources made and used by people to produce and distribute goods and services? (physical resources)

A

Capital

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24
Q

What is all of the producer’s physical resources?

A

Capital

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25
Capital is also known as _________.
physical capital or real capital
26
While businesses invest in real capital, workers invest in _______ capital.
human
27
What is the knowledge and skills gained through experience?
Human Capital
28
What brings Land, Labor, and Capital together?
Entrepreneurship
29
What is the combination of vision, skill, ingenuity, and willingness to take risks that are needed to create and run new businesses?
Entrepreneurship
30
Entrepreneurs risk their time, energy, creativity, and money in the hope of making ______.
profit.
31
What are factors that shape economic choice?
- incentives | - utility
32
What are methods used to encourage people to take certain actions?
Incentives
33
What is the benefit or satisfaction received from using a good or service?
Utility
34
When people economize, they consider both _____ and _________.
incentives and utility
35
To economize means to make decisions according to the best combination of _______ and ________.
costs and benefits
36
Every choice involves ______.
costs
37
Cost can take the form of ______, _______, ________.
money, time, or something you value
38
________ don't require all or nothing choices, rather they involve giving up some of one thing to gain more of another.
Trade-offs
39
__________ of a decision is the value of the next-best alternative, or what you give up by choosing one alternative over another.
Opportunity costs
40
The practice of examining costs and the expected benefits of a choice as an aid to decision making is called what?
cost-benefit analysis
41
What is one of the most useful tools for individuals when they need to evaluate the relative worth of economic choice?
Cost-benefit analysis
42
What is the simplest application of cost-benefit analysis?
Decision-making grid
43
What shows what you get and what you give up when you make choices?
The decision making grid
44
______ and ________ change over time as do goals and circumstances.
Costs and benefits
45
What is central to the study of economics?
the Analysis of marginal costs and marginal benefits
46
What is the additional cost of using one more unit of product?
Marginal cost
47
What is the additional satisfaction from using one more unit of a product?
Marginal benefit
48
What is a graph used by economists to show the impact of scarcity on an economy?
The Production Possibilities Frontier (PPF)
49
The PPF is based on assumptions that simplify economic interactions:
- resources are fixed - all resources are fully employed - only two things can be produced - technology is fixed
50
What is a Latin phrase used in economics to mean all other things being held equal or constant?
Ceteris paribus
51
The PPF represents the border--- __________ ---- between what is possible to produce and what is not possible to produce
frontier
52
In what way does the PPF show the opportunity costs of each choice?
In a visual way
53
What is the condition in which economic resources are being used to produce the max out of goods and services?
Efficiency
54
What is the condition in which economic resources are not being used to their full potential?
Underutilization
55
What does the shape of the PPF show?
a third important economic concept
56
What states that as production switches from one product to another, increasing amounts of resources are needed to increase the production of the second product?
The law of increasing opportunity cost
57
The PPF illustrates a country's present production possibilities as if ________.
all resources were fixed
58
What will shift the curve?
Anything that causes economic output or decrease
59
What are 2 things that would make the PPF shift outward?
- Economic growth | - Technology
60
2 things that would make the PPF shift inward?
- Natural disaster | - War/plague

U.S. Government (9 decks)

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