Unit 1 Terms

Question 1

the study of scarcity and choice

Answer 1

economics

Question 2

a system for coordinating a society’s productive and consumptive activities

Answer 2

economy

Question 3

economic measures that summarize data across different markets for goods, services, workers, and assets

Answer 3

economic aggregates

Question 4

describes a market or economy that takes all opportunities to make some people better off without making other people worse off

Answer 4

efficient

Question 5

the decision by an individual of what to do, which necessarily involves a decision of what not to do

Answer 5

individual choice

Question 6

anything that offers rewards to people who change their behavior

Answer 6

incentives

Question 7

the efforts of people in organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production processes

Answer 7

entrepreneurship

Question 8

a system where the industry is publicly owned and a central authority makes production and consumption decisions

Answer 8

command economy

Question 9

manufactured goods used to make other goods and services

Answer 9

capital

Question 10

a system where the decisions of individual producers and consumers largely determine what, how, and for whom to produce, with little government involvement in the decision

Answer 10

market economy

Question 11

the study of marginal decisions

Answer 11

marginal analysis

Question 12

the branch of economics that studies the overall ups and downs in the economy

Answer 12

macroeconomics

Question 13

the branch of economics that studies how people make decisions and how those decisions interact

Answer 13

microeconomics

Question 14

the rights of owners of valuable items, whether resources or goods, to dispose of those items as they choose

Answer 14

property rights

Question 15

the branch of economic analysis that describes the way the economy actually works

Answer 15

positive economics

Question 16

a graph that shows the maximum quantity of one good that can be produced for each possible quantity of the other good produced. It illustrates the trade-offs facing an economy that produces only two goods

Answer 16

production possibilities curve (PPC)

Question 17

all resources that come from nature, such as minerals, timber, and petroleum

Answer 17

land

Question 18

the effort of workers

Answer 18

labor

Question 19

the branch of economic analysis that makes prescriptions about the way the economy should work

Answer 19

normative economics

Question 20

the real cost of an item: what you must give up in order to get it

Answer 20

opportunity cost

Question 21

anything that can be used to produce something else

ex: land, labor, capital

Answer 21

resources

Question 22

in short supply; when there is not enough of a resource available to satisfy all the various ways a society wants to use it

Answer 22

scare/scarcity

Question 23

when you give up something in order to have something else

Answer 23

trade-off

Question 24

a type of economy used in developing societies; is built around the way a society lives; goods/services determined by the people’s livelihood and are traded instead of sold

Answer 24

traditional economy