Unit 1

Question 1

Needs

Answer 1

Basic requirement for survival

Question 2

Wants

Answer 2

Something we would like to have but not needed for survival

Question 3

Scarcity

Answer 3

Unlimited wants and needs vs limited resources

Question 4

Opportunity cost

Answer 4

Sacrificing one thing for another (guns or butters)

Question 5

Economics

Answer 5

The study of scarcity, choice, and opportunity cost

Question 6

Factors of production

Answer 6

Resources used to produce all goods and services

Question 7

Capital

Answer 7

Good used to produce other goods and services (tools,machines)

Question 8

Entrepreneurship

Answer 8

Person who takes a risk to produce goods and services

Question 9

Land

Answer 9

Natural resources aka “gift of nature”

Question 10

Labor

Answer 10

Human efforts to produce goods

Question 11

Human capital

Answer 11

Skilled and knowledge of labor (more skilled= more value and productivity)

Question 12

Traditional economies

Answer 12

Produce products using historical methods

Question 13

Command economies

Answer 13

Set quotas to achieve production

Question 14

Market economies

Answer 14

Are typically efficient and defined by private property rights

Question 15

PPC

Answer 15

Graphs that show combination of 2 goods an economy can produce with fixed resources

Question 16

Productive efficiency

Answer 16

Getting the most out of resources

Question 17

Capital goods

Answer 17

Used for production

Question 18

Consumer goods

Answer 18

Used for consumption

Question 19

Absolute advantage

Answer 19

Ability to produce more of products with fixed resources or produce product with fewer resources

Question 20

Comparative advantage

Answer 20

Ability to produce with lower opportunity cost

Question 21

Terms of trade

Answer 21

Rate at which 1 good can be trade for another

Question 22

Output

Answer 22

Quantity of finished product

Question 23

Input

Answer 23

Factor of production needed to make the product

Question 24

Cost benefit analysis

Answer 24

Compares costs to benefits to arrive to a decision

Question 25

Marginal analysis

Answer 25

Comparing changes in marginal benefit and costs

Question 26

Marginal benefit

Answer 26

Change in total benefit over change in quantity

Question 27

Marginal cost

Answer 27

Change in total cost over change in quantity

Question 28

Marginal utility per dollar

Answer 28

Calculation of a value to price ratio for the consumption of an additional unit of a product
Formula: mu/p

Question 29

Utility maximization

Answer 29

Occurs when consumer adjusts spending to maximize total utility within income limitation
Formula: mu good x/ $p good x = mu good y/ $p good y