Economics Chapter One Assessment

goods and services, wants and needs

Consumers use ____ and _____ to satisfy their _____ and _____

through the circular flow of economic activity

How do markets link individuals and business?

something has value when it has utility

How is a product's utitlity related to its utility?

The horizontal distance from one point to another represents the opportunity cost of a certain good comparing one amount to another

How is opportunity cost shown on a production possibilities frontier?

less than 3 years

How long does a non-durable item last for?

should factory owners use automated production methods that require more machines and fewer workers, or should they use fewer machines and more workers

How to produce

list choices with their costs and benefits, including time, money, and satisfaction of each educational choice

How would you apply the concept of cost-benefit analysis to the decision to finish high school? To furthere your education?

scarcity

_____ arises because society does not have enough resources to produce all the things people would like to have.

utility

_____ is another name for the capacity of a product to be useful.

human capital

_____ is the sum of the skills, abilities. health and motivation of people.

having only limited resources to meet seemingly unlimited wants

identify the cause of scarcity

opportunity cost

identify the economic concept illustrated by the production possibilities frontier

value

the ____ of a CD player can be expressed in dollars and cents.

opportunity cost

the ____ of going to a football game instead of working would include the money not earned at your job.

model building, cost-benefit analysis to evaluate alternatives, incremental decision making

the economic way of thinking involves simplification with

entreprenuers

Who organizes the other factors of production?

who will receive the things produced

Whom it is for

because of scarcity

Why does society have to decide what, how, and for whom to produce?

no

Does the study of economics tell you what decions to make?

specialization and division of labor

Increases in what cause more economic interdependence?

outside

Points lying ____ the PPC are unattainable with the current availability of resources and technology.

Resources have to be shifted from guns to butter. The opportunity cost is the production of less butter. All of Alpha's resources would have to be employed.

Suppose that Alpha decided to produce more guns and less butter. What would Alpha have to do to make the change? What would be the opportunity cost of producing more guns? What conditions would have to be met for the new mix of guns and butter to be on the PPC?

There is no such thing as a free lunch

TINSTAAFL

factor markets

The factors of production are traded in

land, labor, capital, entrepreneurship

What are the 4 factors of production?

clockwise

What direction does money flow?

more products are produced than before

What does a shoft outward in production possibilties frontier show?

make you a better decision maker and help you undertsand the world around you

What does the study of economics help do?

products that are scarce, useful, and transferable to others

What does wealth consist of?

services whicha re intangible

What does wealth not consist?

it shifts outward

What happens to the procution possibilities frontier when economic growth takes place?

productivity and investments in human capital

What helps economic growth?

investments in human capital

What is among the most profitable of all investments?

quality of life

What is standard of living?

next best alternative (trade off)

What is the opportunity cost of doing something?

cost-benefit analysis

What is the process of comparing the projected or estimated costs and benefits (or opportunities) associated with a project decision to determine whether it makes sense from a business perspective?

production possibilities frontier

What shows the various possible combinations of output that can be produced when all resources are fully employed

what, how, and for whom to produce

What three economic questions must every society answer because of scarcity?

a society cannot have everything so it must decide what to produce

What to Produce

to break down the complex decisions into smaller more digestible parts

Whats the purpose of an economic model?

when resources are idle and not being used to maximum capability

When does production inside the frontier occur?

entrepreuners

Who are risk taking individuals who go into business in order to make a profit?

making a decision in small stages or steps so that the decision can be reversed without too much being lost

describe incremental decision making

land: land itself and natural resources; capital: school building, computers, financial capital; labor: teacher, other workers, publishers; entrepreneurs: people who devise new products and methods of delivery of educational material

describe the factors of production required to deliver a service like education

the cost of the next best alternative use of money, time or resources when one choice is made rather than another

describe the nature of an opportunity cost

consumers use goods and services to satisfy their wants and needs

describe the relationship between goods, services and consumers

product markers are producers offering goods and service for sale. factor markers are productive resources being bought and sold

distinguish between product markets and factor markets

consumer goods

economic products designed to satisfy people's wants and needs are called ____.

it helps people become better decision makers

explain why economic education is important

it deals with people's behavior as they cope with scarcity

explain why economics is considered a social science

productivity is the efficient use of productive resources. the more efficiently productive resources are used, the greater the number of goods and services that are produced

explain why economists argue that productivity is important

because they are intangible and it is difficult to measure their value accurately

explain why services are excluded from the measure of wealth

product market

goods and services are traded in the

services

haircuts, repairs to home appliances, and entertainment are examples of _____.

factors of production

land, capital, labor and entrepreneurs are ____.

WHAT to produce? HOW to produce? FOR WHOM to produce?

list the three basic economic questions that every society must face.

consumers

people who use goods and services to satisfy their wants and needs are called _____.

capital goods

the only factors of production that are themselves the result of earlier production are _____.

description, analysis, explanation, and prediction

the scope of economics deals with

how a free enterprise makes what, how, and for whom decisions

the study of economics helps people understand

individuals and business

what do markets link?

paradox of value

what is the contradiction between necesities and values called?