unit 1

Question 1

scarcity

Answer 1

we have unlimited wants but limited resources

Question 2

positive statements

Answer 2

based on facts(what is)

Question 3

Normative statements

Answer 3

based on opinions(what if )

Question 4

trade offs

Answer 4

all the alternative that we gave up when making a choice

Question 5

opportunity cost

Answer 5

most desirable alternative given up when you make a choice

Question 6

utility

Answer 6

satisfaction

Question 7

marginal

Answer 7

additional

Question 8

allocate

Answer 8

distribute

Question 9

investment

Answer 9

the money sent by business to improve their production

Question 10

5 economic assumptions

Answer 10

1. socirty has unlimited wants but limited resources
2. every choice has a cost
3. we make choices that maximize out satisfaction
4. comparing marginal costs &
5. real life situations can be explained in a graph

Question 11

price VS cost

Answer 11

price is the amount the buyer pays for a product

cost is the amount the seller pays to make the product

Question 12

consumer good VS capital good

Answer 12

consumer good is created for direct consumption

capital good is created for indirect consumption

Question 13

4 factors of production

Answer 13

1. land: all the natural resources
2. labor
3. capital:physical: any human-made resource
   human: any skills gained by education
4. entrepreneurs: ambitious leaders that combine other factors of production to make good

Question 14

production possibilities curve (PPC)

Answer 14

is a model that shows alternative ways that an economy can use as its scare resource

Question 15

4 key assumptions for PPC

Answer 15

1. only 2 goods can be produced
2. full employment of resources
3. fixed resources
4. fixed technology

Question 16

demand

Answer 16

goods consumer are willing to pay

Question 17

law of demand

Answer 17

inverse relationship

P: ⬆ QD: ⬇

Question 18

substitution effect

Answer 18

if price goes up consumer buys less and more of sub

Question 19

income effect

Answer 19

if a price go down, purchasing increase

Question 20

law of diminishing marginal utility

Answer 20

consume product that satisfices you need

Question 21

5 shifters of demand

Answer 21

1. taste
2. # of consumer
3. price of related goods
4. income
5. futre expectations

Question 22

supply

Answer 22

the goods that seller are able to sell at different prices

Question 23

law of supply

Answer 23

direct relationship

P:⬆, QS: ⬆

Question 24

subsidy

Answer 24

is a government payment to a bushiness

Question 25

5 shifters of supply

Answer 25

1. price/ availably of product
2. # of seller
3. technology
4. government action: taxes and subsidies
5. expectation of future profit