Economics CH 1

Production possibilities curve

A graph used by economists to show the impact of scarcity on an economy.

Statistics

Numerical data

Underutilization

Producing fewer goods and services than possible.

Scarcity

The state of lacking resources

Cost benefit analysis

A decision-making process in which you compare what you will sacrifice and gain by a specific action.

Consumer

A person how buys goods or services for personal use.

Producer

A person who makes goods or provides services.

Economic model

A simplified version of reality used to analyze real-world economic situations.

Capital

All the resources made and used by people to produce and distribute goods and services.

Factors of production

Are the resources needed to produce goods and services.

Needs

Basic requirements for human survival

Many high schools throughout the United States have faced a serious shortage of math and science teachers. Many prospective teachers choose to go into business and industry because of higher salaries. In some communities, businesses are "loaning" employees who want to teach part-time to schools to fill the math and science teacher gap. Does this scenario illustrate scarcity? Why or why not?

It is a temporary shortage, so it is not scarcity. Since there are actually teachers that can teach but they just decide not to. If this situation had said that all the time they were lacking science and math teachers, that would have actually been scarcity.

Normative economics

Judgments of what economics ought to be.

Positive economics

Studies economic behaviors as it is.

Self interest

Taking care of yourself but not at the expense of others.

Marginal benefit

The additional satisfaction from using one more unit of a product.

Describe how the owners of a computer repair store might use the four factors of production to run their business.

Land-They would need to find how to get electricity in their store. And they would also need to find how to get water in their store. Labor-They would hire people that know a lot about computers, so they will be able to fix them. Capital-They decided to buy a place that would later be transformed as their store. They would contact other companies that sell computer parts or tools that they would use to fix the computers. Entrepreneurship -Had the idea of opening a store that fixes computers.

Goods

Physical objects that can be purchased (like food, clothing, furniture,..etc).

Efficiency

Producing the maximum amount of goods and services possible.

Land

Refers to all natural resources used to produce goods and services.

Selfishness

Satisfying your own needs at the expense of others

Law of increasing opportunity

States that as production switches from one product to another, increasing amounts of resources are needed to increase production of the second product.

Labor

The amount of effort used to produce goods and services

Utility

The capacity to be useful and provide satisfaction.

Trade off

The choice that people give up when they make choice.

Marginal cost

The cost of producing one more unit of a product.

What is the difference between needs and wants? Explain how a need may also be a want.

The difference between needs and wants is that needs are things ( like food, shelter,...etc) that are needed for survival. While wants are the things that bring us comfort and pleasure in our life. The way that wants may also be a need is that sometimes there is a situation when you want something, that at the same time you also need. For example, it is a hot day and you are thirsty so you want to drink something. And you drink water since you need it to survive. Because if you don't drink it you would die of dehydration.

A website reviewing new CDs offers you a free subscription. All you have to do is complete a brief online application. What is the opportunity cost of this "free" offer? Why do you think this offer is being made?

The opportunity cost of this "free" offer is that if I don't accept the "free" subscription, I will miss the opportunity to be able to read the reviews of the CDs for free. But if I do decide to accept it, the opportunity cost would be that I might regret my decision. For the reason that it wasn't worth it in the way that I am not able to read all the reviews without paying for premium.

Think of some of the options you have for spending time after school--- sports practice, hobby clubs, work, or extra study, for example. Which option would you choose? What is the opportunity cost of your choice?

The option that I would choose is the extra study. The opportunity cost of my choice is that for picking having more time studying, I would be giving up doing something that is way more fun and entertaining for me.

Entrepreneurship

The process of starting, organizing, managing, and assuming the responsibility for a business

What is the relationship between consumer and producer?

The relationship between consumer and producer is that the producer is the one that creates and sells the products, which the consumer buys. And that the consumers have specific wants, which is what leads the producer to know what products to create that the consumer would buy.

The relationship between factors of production and entrepreneurship?

The relationship between factors of production and entrepreneurship is that entrepreneurship is one of the four factors of production.

What is the relationship between incentive and utility?

The relationship between incentive and utility is that because of incentive, it lures the customer to buy the product in the way to believe that the product is useful and it provides satisfaction.

What is the relationship between marginal cost and marginal benefit?

The relationship between marginal cost and marginal benefit is that because of the extra cost that you would pay for another unit of the product ( marginal cost), you would be able to feel satisfaction for having an extra unit of a product that you can use.

What is the relationship between trade-off and opportunity cost?

The relationship between trade off and opportunity cost is that the choice that they decide not to choose ( trade off) involves giving up what they could possibly gain from that action.

What is the relationship between wants and scarcity?

The relationship between wants and scarcity is that scarcity occurs for the reason that there are not enough resources for meeting people's wants.

What services that individuals or businesses provide do you use every day?

The services that individuals or businesses provide that I used every day is when I go to school everyday, so the money that is used for my education is what gives me knowledge.

Economics

The study of how people choose to use scarce resources to satisfy their wants.

Microeconomics

The study of the individual consumers.

Macroeconomics

The study of the whole economy.

Consider the following entrepreneurs: Lucy, who runs an organic farm, and Ron, a sports superstar who owns several restaurants. Describe how they may have used entrepreneurship to establish and run their business.

The way that Lucy and Ron may have used entrepreneurship to establish and run their own businesses is that first, they thought about wanting to have their own business ( organic farm and restaurants). Which lead them to the other 3 factors of production ( labor, capital, and land). So for land they will think of where they can get the resources they need to produce the goods or service that they are providing ( electricity, water,..ect). For labor they would think the type of people they need to hire in their business. And for capital they would think of where they will be having their business and the tools that they will need to buy from other companies to be able to produce the goods or services. And for them to be willing to take a risk that might make them lose all they money if the business doesn't succeed.

How is a decision making grid an example of cost benefit analysis?

The way that a decision making grid is an example of cost benefit analysis is because a decision making grid helps you know the pros and cons of the different options you have, to make the choice that is the most beneficial to you. Which is exactly what cost benefit analysis does.

How does scarcity affect consumers? Producers?

The way that scarcity affects consumers is that since consumers have unlimited wants they will try to buy all the goods that are available to them. Until the companies won't be able to produce the goods, which consumers won't be able to satisfy their wants. And the way that scarcity affects producers is that since there are limited resources to what they use for producing their goods, they will run out of goods to sell that will cause them to close their business.

Select a 10 minute period of time in your day to day life - when you are in the cafeteria at lunchtime, for example. Analyze how scarcity affects your activities during this time period. Write your analysis in a paragraph.

The way that scarcity affects my activities during lunchtime is______.

Two action movies are playing at your movie theatre complex. You have a half-price coupon for one. However, you choose to see the other. How might this still be an example of economizing?

The way that this might still be an example of economizing is that even though you have a coupon that you decide on not using, which could save yourself some money. It might not be a movie that you want to watch, that would cause you to not have fun. But if you decide to watch the other movie, you would pay more but still have a great time since you wanted to watch it. Which could make it a greater choice than the half-price coupon.

Wants

Things that add comfort and pleasure to your life

Incentives

Things that attract or lure people into action.

Economize

To make decisions according to the best combination of costs and benefits.

Opportunity cost

Whatever must be given up to obtain some item.

Services

Work that one person performs for another for payment.