Economics Unit 1

Question 1

What is Autonomy?

Answer 1

Someone’s desire to make their own decisions

Question 2

What is Mastery?

Answer 2

Someone’s desire to master a skill

Question 3

What is Purpose?

Answer 3

Someone’s desire to make a difference

Question 4

What is Financial Incentive?

Answer 4

When money is used as the reward

Question 5

What is Social Incentive?

Answer 5

When the reward projects a positive social image or reputation

Question 6

What is Moral Incentive?

Answer 6

When the reward is the feeling that you did the right thing

Question 7

What is an Opportunity Cost?

Answer 7

The thing(s) you are missing out on when making a decision

Question 8

How does opportunity costs relate to ration decision-making?

Answer 8

If your marginal benefit is greater than your opportunity cost, then the decision was rational.

Question 9

What is Scarcity?

Answer 9

When there will NEVER be enough of a certain resource

Question 10

What is a Shortage?

Answer 10

When there is temporarily not enough of a resource

Question 11

What is a Sunk Cost?

Answer 11

Money that you already spent and can’t get back

Question 12

Why should you try to ignore Sunk costs?

Answer 12

Because they have no financial bearing on future decisions

Question 13

What is a Production Possibility Curve?

Answer 13

A chart that shows the possible amount that can be produced between two resources

Question 14

What does Efficiency mean (in PPCs)?

Answer 14

A state where ALL resources are optimally used

Question 15

What is Inefficiency (In PPCs)?

Answer 15

When NOT all resources are being optimally used

Question 16

What is Growth (In PPCs)?

Answer 16

An increase in the size of a countries possible production (or economy)

Question 17

What does it mean if there is a point on the curve of a PPC graph?

Answer 17

Then all resources are being optimally used

Question 18

What is The Law of Increasing Costs?

Answer 18

To produce an increasing amount of a good, a supplier must give up greater and greater amounts of another good

Question 19

What is the Product Market (In a circular flow diagram)?

Answer 19

Where the goods and services produced by firms are bought by the household

Question 20

What is the Factor Market (In circular flow diagrams)?

Answer 20

Where the factors (or resources) for production are bought and sold

Question 21

What is Land?

Answer 21

All natural resources