Midterm 1 (Fundamentals 1 & 2)

Question 1

Types of resources

Answer 1

land, labor, capital, entrepreneurial ability

Question 2

land

Answer 2

natural resources, raw materials

Question 3

labor

Answer 3

human activity to produce good or service

Question 4

capital

Answer 4

manufactured resources (goods that are used to produce other goods)

Question 5

Entrepreneurship

Answer 5

risk taking ability, managerial talent, organizational ability

Question 6

economics helps us to ______________ goods and services while using the fewest _____________ possible.

Answer 6

maximize
resources

Question 7

opportunity cost

Answer 7

the value of the NEXT BEST alternative (opportunity you give up)

Question 8

Assumptions for decision making

Answer 8

self-interest, marginal decision making, optimization

Question 9

with increased activity, marginal benefit ______.

Answer 9

falls

Question 10

with increased activity, marginal cost _______.

Answer 10

rises

Question 11

diminishing marginal benefit

Answer 11

as you do/consume more of something, it’s marginal benefit decreases

Question 12

The law of increasing opportunity cost

Answer 12

Costs rise as economic activity increases (because more resources need to be used)

Question 13

when graphing production possibilities, everything under the curve is __________ but _____________.

Answer 13

possible
inefficient

Question 14

Comparative advantage

Answer 14

The ability to produce a good or service at a lower opportunity cost than another producer (David Ricardo)

Question 15

Bowed out curve represents ___________ opportunity cost of production

Answer 15

increasing

Question 16

The two markets in the circular flow model

Answer 16

resource market, product market