Chapter 1 Economics Test

Economists use a ____________________ to illustrate all possible combination of outputs.

production possibility curve

Trade-offs are what you must __________ when you make a choice.

Give up

What is the difference between a good and a service?

Goods are tangible items to satisfy a need or a want. A service is the performed.

What is GDP?

Gross Domestic Product

Growth entails putting ____________ to use efficiently, which often includes speculation.

Human Capital

How can explanation make it easier to address economic problems in the future?

It will be easier to fix problems in the future.

People with their ability and efforts are called what?

Labor

Natural resources not created by people is called ______.

Land

The ___________ is the key mechanism of the circular flow of goods and services.

Market

In a ______________ consumers and privately owned businesses make economic decisions. (not the government)

Market Economy

Explain the difference between a want and a need

Needs are a basic requirement for survival. Wants are things we would like to have but aren't necessary.

Is anything actually free? Why or why not?

Nothing is free; Somebody down the line will have to pay for what you got free

When making a decision it is useful to consider _______________, or the value of the next best alternative that would be given up.

Opportunity cost

Most resources needed for production are _____________

Scarce

__________ is the fundamental economic problem facing all societies.

Scarcity

What factors go into how to produce goods?

The availability of labor and cost

List the four factors of production.

1. Land 2. Labor 3. Capital 4. Entrepreneurs

What are consumer rights?

1. Safety 2. Be informed 3. Choose 4. Be heard 5. To redress

List the four characteristics of the accumulated goods that make up economic wealth.

1. Tangible 2. Scarce 3. Have utility 4. Transferable from one person to another

People who start new businesses or bring new products to market are called ___________

Entrepreneurs

The tools we use to create goods are called what?

Capital Goods

Consumer's needs and wants must be met through the production of ___________, ______________, _____________.

Durable goods, Nondurable goods, Consumer goods.

_______________ is when a nation's total output of goods and services increases over time.

Economic Growth

________________________ describes how we rely on others, and others rely on us, to provide most of the goods and services we consume.

Economic Interdependence

______________________ are diagrams that help economists understand complex economic data or concepts.

Economic models

_________ describes, analyzes, explains, and predicts trends in a nation's gross domestic product.

Economics

What determines the monetary value of a good or service?

It must be scarce and it has to have utility.

In addition to rights, consumers also have ________ which include _________

Responsibilities, Behaving ethically

Adam Smith

The first economist who discussed the paradox of value. He wrote The Wealth of Nations in 1776. Known as the Father of Economics.

Who makes the decisions about what to produce in North Korea? Who decides in the U.S.? How can the decisions affect the people living in those societies?

The government The people It affects what goods are available for consumption

TINSTAAFL

There Is No Such Thing As A Free Lunch

Why must societies decide for whom to produce?

They have to choose who will receive the existing supply because there aren't enough resources to meet all wants.

Societies must decide ________ to produce, ___________ to produce it, and ___________ it is to be produced.

What, How, For Whom

A frontier can show the cost of ______ resources, which are available but unused.

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