LAP-EC-006: SECTION A and B
two factors involved in determining the value of a resource, good, or service are...
availability and demand
in economics, capital goods include...
buildings and equipment
the ultimate goal of all economic activity is...
consumption
what is consumption?
consumption is the process or activity of using goods and services
what is distribution?
distribution is the process or activity by which incomeis divided among resource owners and producers.
seeing a movie at a theatre would be considered a(n) __________ want.
economic
into what two categories can wants be divided?
economic and noneconomic
what do consumers, producers, and the owners of resources do with money payments to create a flow of resources, goods, services, and money payments?
exchange
explain the relationship between production and consumption.
for consumption to occur, goods and servicesmust be produced. the relationship between consumption and production mustbe balanced ( this means that enough goods and services must be produced to satisfy consumers' wants but not somany that producers lose money)
describe your favorite color in medium-form detail.
my favorite color is yellow because it is happy and bright.
give an example of each of the three types of resources.
natural - trees to paper human - constrution worker(s) capital goods - buildings and machinery
water and air are examples of __________ resources, while people are considered to be __________ resources.
natural; human
john only had $40 to spend and couldn't decide whether to buy a new pair of jeans or to go to an amusement park. he finally decided to spend his money on the amusement park. What was the opportunity cost of his decision?
new pair of jeans
in order for consumption to occur, goods and services must be...
produced
distribution examines how income is divided between...
producers and resource owners
consumers are typically most willing to pay more for goods and services that bring them greater...
satisfaction
a gap between unlimited wants and limited resources creates...
scarcity
describe the concept of economizing.
the concept of economizing is the process of deciding how to get the most with the least obtaining the greatest satisfaction from the least amount of resources (i.e. businesses must decide what products to produce and / or provide to consumers and the consumers must decide what / how they want to spend their income on those goods, services)
why are resources considered limited?
there are not enough available for everyone to have as much of them as desired
explain the three basic economic questions that all societies must answer.
1. What will be produced? - societies must determine what and how many goods and servicesto produce. they must decide how to allocate their limited resourcesbetween production of capital goods and consumer goods. 2. How will the products be produced? - most goods and services can be produced in a variety of ways. societies must decide the best, most efficient ways to use their limited resources to produce their products 3. How will the products be allocated? - societies must determine how the goods and services will bedivided among their people. they need to decide how individuals, businesses, and governments will share their products
identify and describe three categories of resources.
1. natural resources: items found in the environment that areused to produce goods and services (i.e. trees, air, and land; trees can be used to produce paper products, air can be used to generate electricity, and land can be used to grow agricultural products) 2. human resources: people are "our" human resource; they are valued for the physical and mentalwork that they do to produce goods and services (i.e. construction workers and busdrivers) 3. capital goods: all of the manufacturedor constructed items that are used to producegoods and services (i.e. buildings, equipment, and machinery used to produce goods and services, along with the transportation systems used to provide access tothe products)
michelle is trying to decide which goods and services to purchase so that she can get maximum satisfaction. michelle is...
economizing
true or false: economics is the study of how to meet limited, competing wants with unlimited resources.
false
under what circumstances might a person's wants change?
if one grew up or if they wanted something, but it was too expensive (i.e. as a kid you would ride your bike everywhere but then as an adult one would like to take a car for transportation)
why is each of the categories of resources limited?
natural resources are limited for a number of reasons. the world's population is growing, so there are fewer resources per person. some natural resources are difficult or costly to obtain, and others are running out. some developing countries lack the technology to tap their natural resources, and weather conditions and the environment affect the supply of other natural resources. our human resources are limited because only some of the world's people are willing and able to work. there are also worker shortages in certain professions. these shortages may arise because the local labor force lack the specialized training needed for these jobs or because qualified people do not live in the geographic region where the job opportunities exist. capital goods are limited by the amount of labor and natural resources available to produce them and the money available to purchase them. they may also be limited due to a lack of technology in some parts of the world.
is it possible to limit wants? why or why not?
no because there will always be desires one wants everyday.
friendship would be considered a(n) __________ want.
noneconomic
what does "get the most with the least" mean?
obtaining the greatest satisfaction from the least amount of resources.
what is opportunity cost?
opportunity cost is the benefit that is lost when you decide to use scarce resources for one purpose rather than for another.
what are the three basic economic questions?
What products will be produced; how will products be produced; and how will products be allocated?
why must societies answer the three basic economic questions?
societies must determine what and how many goods and services to produce. they must decide how to allocate their limited resourcesbetween production of capital goods and consumer goods societies must determine how the goods and services will bedivided among their people. they need to decide how individuals,businesses, and governments will share their products societies must decide the best, most efficient ways to use theirlimited resources to produce their products
rob decided to drive to school, rather than taking the school bus. what was the opportunity cost of Rob's decision?
the opportunity cost is rob not taking the "free way" and not taking the bus rather than having his own car (which costs money for gas) to school.
how are trade-offs and opportunity costs related?
they both give up something to do another thing.
what is the purpose of economizing?
to obtain the greatest satisfaction from their limited resources
which of the folowing is the best reason for studying economics...
to prepare for effective decision making and responsible citizenship
a manager is willing to accept the production of fewer products as long as her workers produce higher quality products. the manager is makeing a(n)...
trade off
which of the following groups of words best describes wants...
unlimited, changing, and competing
what are wants?
wants are desires for things that may or may not be necessities.
what is scarcity?
scarcity is the gap between limited resources and unlimited wants for goods and services.
explain the relationship among resources, wants, and scarcity.
the gap between unlimited wants for goods and services and limited resources creates scarcity.
discuss the role of trade-offs in economic decision making.
trade - offs are when individuals, businesses, and governments must be willing to give up all or part of one thing in order to get something else (i.e. managers may be willing to accept the production of fewer products if workers produce higher quality products. the trade - off is that a person or organization is willing to accept should be based on the opportunity costs involved)
explain why wants are considered unlimited.
wants are unlimited because everyone always has desires for goods and services
explain three factors that impact the values attached to money payments.
1. productivity: productive resources usually earn more than less productive ones (people who sit on the bench during a baseball game get paid less than the players on the field) 2. demand: as peoples desires for resources, goods, and services increase, so do the money payments they are willing to make (when kobe bryant died, the demand for his jerseys increased, and so did the money value) 3. availability or supply: resources, goods, and services that are abundant are usually less highly valued than scarce ones (when unseasonably cold weather damages Florida's citrus crops, the price of oranges increases because citrus fruit is scarce. when the weather ismild and the fruit is plentiful, though, the price goes down)
distinguish between economic and noneconomic wants.
economic wants are desires for items that can only be obtained by spending money and noneconomic wants are desires for things that can be obtained without money.
the heart of economics is
decision making
give one example of an economic want and one example of a noneconomic want.
economic want - a cell phone noneconomic want - friendship
what is economics?
economics is the study of how to meet unlimited, competing wants with limited resources.
why does exchange take place?
after acquiring enough resources from resource owners, producers are able to produce goods and services. to obtain these goods and services, consumers make money pay- ments to the producers. this money payment is the price of the good or service.The producers, consumers, and resource owners exchange money payments. this results in a circular movement, or flow, of resources, goods, services, and money payments.