Economics Chapter Question Ch1-3

Why do all economic decisions involve trade-offs?

No matter what the decision is you are giving up an another benefit to achieve the new one.

How does scarcity differ from a shortage?

Scarcity will never go away. Shortage occurs when a customer wants more than what is produced. Scarcity is the endless desire for more.

How does a nation decide what and how much to produce?

They use a production possibilities curve which is a graph that helps see what consumers desire more. Usually used between two products.

Why do many economic decisions involve thinking on the margin?

To go through all the possible scenarios to make the right decision. This is...

What is a benefit of using both physical capital and human capital?

Using goods is ok but if you have the knowledge (human capital) to use the resource or object to create goods(Physical Capital) thats even better.

What is the difference between goods and service?

Goods are physical objects people produce such as food. Services are actions or activities that someone preforms.

Describe how scarcity of time, money, or resources affected a recent economic decision you made.

I had a scarcity of time so i was not able to study for a test I failed.

What do economist mean by growth? What factors can produce economic growth?

If quality or quantity. of land,labor, or capital changes . If a wave of immigration increases.

Explain why a country might stop growing food and shift its resources to manufacturing clothing.

If they are over stocked on food for the time being there is no need to waste so resources on that product.

How does the phase "guns or butter" express the principle of trade-offs?

If you put more money toward guns then you are giving up another benefit which is a trade off.

What is the impact of underutilization of resources?

It will not profit the company as much as it could.

How does scarcity force people to make economic choices?

A store must decide between hiring 10 new workers or paying for more advertising to attract new customers. (pg4)

What does an entrepreneur do?

Are people who decide how to combine resources to create new goods and services.

Why is it important to compare marginal cost to marginal benefits?

to make sure you aren't loosing any money

What do economist mean by efficiency?

to maximize the output of goods and service.

How does opportunity cost affect decisions making?

You have to see what your consumers want the most.

What is production possibilities curve?

is a graph that shows alternative ways to use an economy's productive resource.