The economic way of thinking

Question 1

What are the 2 basic desires?

Answer 1

Needs and wants

Question 2

Desires that can be satisfied by consuming a good or service

Answer 2

Wants

Question 3

Things such as food, clothing, and shelter that are necessary for survival

Answer 3

Needs

Question 4

The situation that exists when there are not enough resources to meet human wants

Answer 4

Scarcity

Question 5

The study of how people choose to use scarce resources to satisfy their wants

Answer 5

Economics

Question 6

____________ is central to the use of scarce resources

Answer 6

Choice

Question 7

Physical objects that can be purchased such as food, clothing, or furniture

Answer 7

Goods

Question 8

Work that one person performs for another for payment

Answer 8

Sevices

Question 9

Person who buys goods or services for personal use

Answer 9

Consumer

Question 10

Person who makes goods or produces services

Answer 10

Producer

Question 11

What are the three economic questions?

Answer 11

What to produce?
How to produce them?
Who to produce them for?

Question 12

What are the four factors of production?

Answer 12

Land
Labor
Capital
Entrepreneurship

Question 13

All the natural resources found on or underground that can be used to produce goods and services

Answer 13

Land

Question 14

All the human time, effort, and talent that go into the making of products

Answer 14

Labor

Question 15

All the resources made and used by people to produce and distribute goods and services; All the producer’s physical resources

Answer 15

Capital

Question 16

What are the resources necessary to produce goods and services?

Answer 16

Factors of production

Question 17

The combination of vision, skill, ingenuity, and willingness to take risks that is needed to create and run new businesses

Answer 17

Entrepreneurship

Question 18

The knowledge and skills gained through experience

Answer 18

Human capital

Question 19

Methods used to encourage people to take certain actions

Answer 19

Incentives

Question 20

The benefit or satisfaction received from using a good or service

Answer 20

Utility

Question 21

To make decisions according to the best combination of costs and benefits

Answer 21

Economization

Question 22

What factors shape economic choices?

Answer 22

Incentives, Utility

Question 23

Do not require all or nothing choices, rather, they involve giving up some or one thing to gain more of another

Answer 23

Trade-offs

Question 24

The value of the next-best alternative or what you give up by choosing one over another

Answer 24

Opportunity cost

Question 25

The practice of examining costs and the expected benefits of a choice as an aid to decision making

Answer 25

Cost-benefit analysis

Question 26

Shows what you get and what you give up when you make choices

Answer 26

Decision-making grid

Question 27

The additional cost of using one more unit of product

Answer 27

Marginal cost

Question 28

The additional satisfaction from using one more unit of a product

Answer 28

Marginal Benefit

Question 29

A graph used by economists to show the impact of scarcity on an economy

Answer 29

Production Possibilities Frontier

Question 30

PPF is based on what assumptions?

Answer 30

Resources are fixed
All Resources are fully employed
Only two things can be produced
Technology is fixed

Question 31

Latin phrase used in economics to mean all other things being held equal or constant

Answer 31

Ceteris paribus

Question 32

The condition in which economic resources are being used to produce the maximum amount of goods and services

Answer 32

Efficiency

Question 33

The condition in which economic resources are not being used to their full potential

Answer 33

Underutilization

Question 34

States that as production switches from one product to another, increasing amounts of resources are needed to increase the production of the second product

Answer 34

Law of Increasing Opportunity Costs