Unit 7 Civics Economics

Explain the difference between goods and services

A good (book) is a tangible item and a service is intangible and something that one does for you (babysitting)

What is the difference between a trade off and opportunity cost?

A tradeoff is choosing one thing over another (Giving up full ride to Duke, to go to UNC). An opportunity cost is the value of what you gave up (losing $50 from working instead of a birthday).

What are consumers and producers?

Consumers use/buy a product, a producer makes/sells the product

What is a corporation?

Corporation: chartered by a state and legally operates apart from its owners

What is the law of supply and the law of demand?

Law of supply is as the price of a good rises, its quantity supplied will rise, and vice versa. The law of demand is as the price of a good or service rises, its quantity demanded falls.

What is productivity?

Measures the amount of output produced by a given number of inputs over a period of time

What is the difference between microeconomics and macroeconomics?

Microeconomics is the study of choices made by individuals or small businesses. Macroeconomics is the study of choices made by entire industries and countries.

What is a sole prietorship?

Sole proprietorship: business owned and operated by one person -approx. 76% of all businesses in US are proprietorships -ex. Bagel bin owned by family

What is equilibrium?

situation where there is no inherent tendency to change, quantity demanded equals quantity supplied, and the market just clears.

What are the 2 factors of production that are things? Give an example of each.

Capital (stove, money, roads) and land (wood). Human capital is knowledge and skills

What are the 2 factors of production that must be people? Give an example of each.

Entrepreneurship (owner) and labor (cook)

What is a franchise?

Franchise: A legal agreement that gives an individual the right to market a company's products or services in a particular area

What is scarcity? Give an example of something that is scarce.

Having more wants than resources, the key to economics. Gold can be scarce.

What are human and natural resources?

Human: knowledge, skills, Natural- land, water, oil

What is the law of diminishing returns?

If one input in the production of a commodity is increased while all other inputs are held fixed, a point will eventually be reached at which additions of the input yield progressively smaller, or diminishing, increases in output (paper chain activity)

Explain the difference in elastic and inelastic demand. Give an example of each

Inelastic demand is an economic term used to describe the situation in which the supply and demand for a good or service are unaffected when the price of that good or service changes. ex. gasoline, insulin. Elastic demand is as the price falls, demand rises and vice versa. If the price increases demand decreases. ex. toys

Describe the difference between needs and wants

Needs are a necessity, like water. Wants are desired things that we can live without, like a movie ticket

What is limited liability? What kind of businesses have it?

Owners are liable only up to the amount of their investments ex. Corporation

What is a partnership?

Partnership:two or more people share assets, liabilities, and profits

What are capital goods? Use an example

Products used to produce the product ex. machinery, raw materials

What are specialization and division of labor? How do they improve productivity?

Specialization is concentrating productive efforts on specific tasks that one is best at. Division of labor is separation of work where everyone comes together at the end to finish the product/activity. They both use teamwork and increase productivity by having more help with each other to decrease amount of time and effort it requires to do something.

I chose to go to college for engineering. While I was in college I could have made 10,000 working. What is the trade off and the opportunity cost?

The trade off is going to college and earning degree and possibly working as an engineer. The opportunity cost is the $10,000 you would have made working instead.

What are the basic economics questions?

What should we produce? How should we produce it? For whom should we produce it? How much?

Define economics

the study of choices in a world full of unlimited wants and limited resources. study of scarcity and tradeoffs