Name __________________________
Quiz Date / due date ______________
What is Economics?
Principles and Practices of Economics
Chapter 1 Study Guide
Directions: Referring to your text, read pages 1-20, and answer the following questions.
Use this as a reference when studying for the chapter quiz, and be prepared to turn it in for
credit prior to taking the quiz.
Section 1:
1.
The study of how people choose to use their limited resources is known as
________________________.
2.
Things like air, food, and shelter that are needed for survival are known as
__________________.
3.
Items that we desire, but are not essential for survival are known as
__________________.
4.
Another way to define the term economics would be that it is the study of how people
seek to satisfy their needs and wants by making _____________.
5.
Physical objects that people can buy to satisfy wants and needs are known as
_________________.
6.
Actions or activities that one person performs for another are known as
_________________.
7.
Describe the differences between scarcity and shortages.
8.
Of the two (scarcity and shortage), which always exists? ___________________
9.
The term for all resources that are used to make goods and services is known as
_________________________________.
10.
These factors include what three things? ___________, __________, & __________
11.
All natural resources used to produce goods and services are considered __________.
12.
The effort that a person devotes to a task for which he or she is paid is known as
___________.
13.
Human made resources that are used to produce other goods and services are known
as ______________ .
14.
Buildings and tools would be examples of ________________ capital.
15.
Three typical benefits of increased physical capital would include ___________
_________, __________ ________________, & ________ ___________________
16.
The knowledge and skills workers gain through education and experience are known
as ________________ capital.
17.
Often considered a fourth factor of production is the concept of entrepreneurship.
Ambitious leaders who decide to combine land, labor, and capital resources to create
new goods and services are known as _________________________.
18.
Read the profile on Gary Becker on page 7. According to Mr. Becker, “Economy is
the art of what?” ______________________________________________
Section 2:
19.
All of the alternatives that we give up when we choose one action over another are
known as ________________________.
20.
The most desirable alternative given up as the result of a decision is called the
_____________________ _____________.
21.
When making a decision, and you decide whether to do or use one additional unit of a
resource, you are __________________ ___ _________ ______________.
Section 3:
22.
Why do economists often use graphs?
23.
A graph showing alternative ways to use an economy’s resources is known as a
_____________________ ______________________ graph.
24.
The line on a production possibilities graph that shows the maximum possible output
of goods or services is called a _________________ ______________ ___________.
25.
What 3 important pieces of information can a production possibilities graph show?
1. ____________________________________________________________
2. ____________________________________________________________
3. ____________________________________________________________
____________________________________________________________
26.
Using resources in such a way to maximize production or output of goods and
services is known as _________________.
27.
Using fewer resources than an economy is capable of using is known as
_____________________.
28.
When an economy grows, what do economists say has happened to the production
possibilities curve? ________________________________________
29.
The alternative given up because of a decision is known as a ________________.
30.
The law of increasing costs, which states that as factors of production are shifted
from making one good or service to another, the cost of producing the second item
increases, explains that as we move along the curve, we trade off more and more to
get less and less ___________________ ___________________. (see figure 1.7 p. 17)
31.
Read the chapter summary carefully on page 20.
32.
Answer items 1-7 from the Key Terms activity on page 20, by writing the correct
matching term in the appropriate blanks below.
1. ___________________________________
2. ___________________________________
3. ___________________________________
4. ___________________________________
5. ___________________________________
6. ___________________________________
7. ___________________________________