Unit 1: Economic Principles

Question 1

Scarcity

Answer 1

Individuals and groups have unlimited wants and needs but decisions are made knowing that there are only a limited amount of resources available

Question 2

Trade-offs

Answer 2

Giving up something when having to make a decision due to scarcity (Sacrificing one thing for another)

Question 3

Opportunity Cost

Answer 3

The value of the first top option NOT chosen when making a decision. The cost of the thing we give up.
(What if)

Question 4

What are the Factors of Production?

Answer 4

Land
Enterprise
Labor
Capital

Question 5

What is Land?

Answer 5

Natural resources available for production

Question 6

What is Labour?

Answer 6

The human input into the production process

Question 7

What is Enterprise?

Answer 7

Entrepreneurs organize factors of production and take risks

Question 8

What is Capital?

Answer 8

Goods used to give service

Question 9

Positive Economics

Answer 9

“What is”
Factual and Objective
No indication of endorsement or disapproval.
Absolute Statements

Question 10

Normative

Answer 10

Opinion based
Subjective and value judgments
”should”
Opens the door for discussion

Question 11

Correlation

Answer 11

Relationship between two variables

Question 12

Causation

Answer 12

Variables share a CAUSE & EFFECT relationship

Question 13

What are Incentives?

Answer 13

Expectations, rewards, motivation or punishment that encourages a certain behavior

Question 14

What are the different types?

Answer 14

Moral
Social
Economic
Coercive

Question 15

What is moral incentive?

Answer 15

You want to do the “right thing” not the “wrong thing”

Question 16

Social Incentive

Answer 16

Peer pressure
Does something that is viewed well by other
Better social statud

Question 17

Economic Incentive

Answer 17

Monetary
Expects financial reward or avoiding a financial penalty

Question 18

Coercive

Answer 18

Punishment

Question 19

Unintended Consequence

Answer 19

An unintended result of people using the incentive

Question 20

Explicit Costs

Answer 20

Use of money; spending

Question 21

Implicit Costs

Answer 21

Opportunity costs
Stuff you use in your jobs you already had
A cost that exists without the exchange of cash and is not recorded

Question 22

Variable Costs

Answer 22

Costs that change based on how much is produced or consumed

Question 23

Fixed Costs

Answer 23

One time costs that do not change based on how much is produced or consumed

Question 24

Supply

Answer 24

Refers to the amount of goods that are willing and are to be be available

Question 25

Demand

Answer 25

Refers to consumers who are willing and able to purchase goods/services

Question 26

Producers

Answer 26

Willing and able to supply the good/service

Question 27

Shortage on a graph

Answer 27

Below Equilibrium price

Question 28

Surplus on a Graph

Answer 28

Above equilibrium price

Question 29

Substitute Good

Answer 29

Replace
Ex: Choosing Freud over tots in a combo

Question 30

Complementary Good

Answer 30

Goes well along with another good. A packaged deal

Question 31

Inferior good

Answer 31

Cheaper, less quality
Shein