Economics: Intro to Economics

(Essay) What is economics? Why is it important to learn about the ideas that economics covers?

Economics is the study of how society uses its scarce resources to satisfy its wants and needs. Studying economics can help us to realize that choosing one use for a scarce resource means giving up the opportunity to use it for something else and understand that making the best use of our resources requires thinking carefully about our choices.

(T/F) In order for a resource to be considered scarce it must be expensive.

False

(T/F) Supply and demand for all goods and services is constant and does not change.

False

(Essay) Using complete sentences, explain the three criteria that make a resource scarce.

For a resource to be scarce, it must be limited in supply. Next, a resource must be desirable or in demand. If something is not in demand, then it cannot be scarce because no one would want it in the first place. Lastly, a resource may have more than one valuable use. For example, water has many uses outside of drinking. We use water for sewage and countless other purposes. This makes water a very valuable and, often, scarce resource.

(Essay) Using four or more sentences, summarize the concept of relative scarcity.

Relative scarcity means scarcity can be different depending upon the circumstances involved. If a particular resource is plentiful—meaning there is more than enough supply for the demand—in one area, it can still be scarce in another area where the resource is limited, desirable, and/or has more than one use. Scarcity, therefore, is relative to the supply available and demand in a particular area.

(Essay) Using complete sentences, explain (in economic terms) the difference between scarcity and shortage.

Scarcity is used to refer to the idea that, overall in the world, there are not enough resources to meet humans' unlimited needs and wants. Scarcity is an on-going condition. Shortage, on the other hand, refers to a situation caused by an imbalance in supply and demand. A shortage occurs when producers are not willing or able to supply as much as consumers demand. A shortage can last a long time or a short time, depending on how long it takes for supply and demand to come into balance.

Federal, state, and local governments face the problem of scarcity every day. Which of the following newspaper headlines illustrates a government facing the problem of scarcity? Concert Tickets in High Demand Mild Weather Expected to Increase Area Tourism Southeast Cities Battle Over Water Usage Rights on the Dogwood River Calling All Potential Nurses—Growing Hospital Industry WANTS YOU!

Southeast Cities Battle Over Water Usage Rights on the Dogwood River

(Essay) Outline the three decisions any society must make when considering the use of its limited resources.

The three decisions that any society must make are the following: what to produce, how to produce it, and who will use what is produced.

(T/F) A shortage can be either short-term or long-term, but it is not an ongoing condition.

True

(T/F) Economists consider time to be a scarce resource.

True

(T/F) It is possible for a resource to be scarce in one part of the world and plentiful in another.

True

(T/F) Scarcity is an ongoing part of the human condition.

True

Which of the following BEST describes the main difference between scarcity and a shortage? While a shortage is a temporary market condition, scarcity is an ongoing condition in the world. While scarcity is a temporary market condition, a shortage is an ongoing condition in the world. Scarcity is found throughout the world, but shortages only occur in wealthy countries. Shortages occur everywhere, but scarcity happens only in countries with very high poverty levels.

While a shortage is a temporary market condition, scarcity is an ongoing condition in the world.

Which of the following is NOT one of the three important decisions about how to use limited resources? What should be produced? How should it be produced? Who will use what is produced? Why is it being produced?

Why is it being produced?

Two name brand electronic companies have decided join the cellular phone production market. To save money on how much they pay their employees, they have decided to have their new phones manufactured overseas. Which of the basic economics questions have these companies answered? a. What should be produced? b. How should it be produced? c. Who will use what is produced? a only c only a and b only a, b, and c

a and b only

A town builds a new road north of the town to replace one that was in bad shape. The new road is wider, has smooth pavement, and flowering bushes have been planted along the roadside. Compared to the road south of town, the new road gets very little use. This is because many of the residents work in a factory several miles south of town. The north road is used mostly on weekends by wealthy families driving to their mountain cabins. Many residents are angry about this. Which of the following economic questions was NOT adequately considered before building the road? a. What should be produced? b. How should it be produced? c. Who will use what is produced? b only a and b only b and c only a and c only

a and c only

Which of the following are required for a resource to be considered scarce? a. It must be desirable. b. It must be plentiful. c. It must exist in limited quantities. a only b only a and b only a and c only

a and c only

In economic language, a shortage is best defined as __________. a situation in which the demand for a good or service is greater than the amount supplied in a market an ongoing condition of limited resources to meet unlimited needs and wants too many businesses selling a product and not enough people who want to buy it a situation in which people need to be very careful with what they have because they might not be able to afford more

a situation in which the demand for a good or service is greater than the amount supplied in a market

Crude oil, which is found only in certain regions of the world, is used for using the gasoline Americans use every day. Oil can also be refined into diesel and jet fuel. Additionally, it is used to make plastic and man-made fibers such as nylon. Which of the following characteristics of scarcity does oil exemplify? ai. limited in quantity b. desirable c. has more than one use a only b only b and c only a, b, and c

a, b, and c

Which of the following would solve the problem of scarcity in the world and eliminate the need for economics? an unlimited supply of resources unlimited want and demand from consumers a scarcity of resources a shortage of demand

an unlimited supply of resources

Emerson County has two large lakes. The county runs a fish hatchery that raises three kinds of fish that are used to keep the lakes stocked. Anyone can go boating or canoeing on the lakes, but only people who buy a license are allowed to fish in them. Which of the following economics questions is Emerson County focusing on by requiring a license to fish? a. What should be produced? b. How should it be produced? c. Who will use what is produced? a only b only c only a and c only

c only

Which of the answer choices BEST explains what relative means in the sentence below? Scarcity is a relative concept; for instance, firewood may be scarce for some people but not for others. dependent upon the circumstances involved involving members of the same family connected to natural resources such as forests happening in cold climates but not warm ones

dependent upon the circumstances involved

According to economists, as a result of scarcity, people must __________. spend less money now so they have more in the future realize that they can never have what they want design ways to recycle more of what they own make choices about how to use their resources

make choices about how to use their resources

Money, property, and information are all types of which fundamental concept in economics? scarcity resources products goods

resources

Economics is focused on the problem of __________, which is created by a world with limited resources and people with unlimited needs and wants. scarcity terrorism abundance extraction

scarcity

A higher demand for a good or service than what is currently available in the market is the definition of __________. surplus scarcity shortage supply

shortage

A new product is released to greater demand than expected. Many people want the product, but there is not enough to meet the demand. This scenario BEST illustrates which of the following economic problems? scarcity shortage surplus supply

shortage

The recent development of a plant growth formula has resulted in an unexpectedly large harvest. The economic problem most likely to arise is a __________. scarcity of workers shortage of workers scarcity of food shortage of food

shortage of workers

Economics is the study of how society __________. can gain increasing amounts of resources uses scarce resources to satisfy its needs and wants invests its money in different kinds of businesses prevents shortages of its most popular goods and services

uses scarce resources to satisfy its needs and wants

Economists believe it is important to make __________ decisions about __________ resources. wise . . . scarce quick . . . plentiful popular . . . scarce popular . . . plentiful

wise . . . scarce