Name _______________________________________________________ Class Period ___________ Date ______________
Fundamental Economic Concepts
SSEF1 – The student will explain why limited productive resources and unlimited wants result in scarcity,
opportunity costs, and tradeoffs for individuals, businesses, and governments.
a. Define scarcity (pg. 3)________________________________________________________________________________
b. Define and give examples of productive resources (factors of production) (e.g., land (natural), labor (human), capital
(capital goods), entrepreneurship). (pgs. 4-5)
1) Land __________________________________________________________________________________________
2) Labor _________________________________________________________________________________________
3) Capital ________________________________________________________________________________________
4) Entrepreneur___________________________________________________________________________________
c. List a variety of strategies for allocating scarce resources (pg. 8)
1) Individuals and Trade-Offs ____________________________________________________________________
2) Businesses and Trade-Offs ____________________________________________________________________
3) Society and Trade-Offs _______________________________________________________________________
d. Define opportunity cost ______________________________________________________________________________
SSEF2 - The student will give examples of how rational decision making entails comparing the marginal benefits and
the marginal costs of an action.
a. Illustrate by means of a production possibilities curve the trade offs between two options (pgs 13 – 18).
 Label your curve PPF
15
Possibility
Guns
Butter
a
b
c
d
e
f
0
1
2
3
4
5
15
14
12
9
5
0
12
10
8
6
4
2
0
1
2
3
4
5
1. Why is the PPF curved when charted on a graph? ______________________________________________________
______________________________________________________________________________________________
2. How many guns can you produce if you produce no butter? _________________
3. How much butter do you produce when you produce no guns? _________________
4. How many guns do you give up if you produce 12 butter? ________________
5. How much butter do you give up if you produce 4 guns? ________________
6. What might happen to the production of guns if workers were laid off due to the recession?___________________
______________________________________________________________________________________________
7. Any point inside the PPF line indicates the ______________________________ of resources, whereas any point
outside the line indicates _________________________ production possibilities frontier.
b. Explain that rational decisions occur when the marginal benefits of an action equal or exceed the marginal
costs (pgs. 9-11)
 Fill out the following chart by determining the benefits, and benefits forgone of decision making.
 Identify 3 benefits and benefits forgone for both alternatives
Benefits
Benefits Forgone
Opportunity Cost
Alternatives
Attend College
1.
Get A Full-Time Job
1.
2.
2.
3.
3.
1.
1.
2.
2.
3.
3.
1.
1.
1) What does it mean to think at the margin? ________________________________________________________
___________________________________________________________________________________________
SSEF3 The student will explain how specialization and voluntary exchange between buyers and sellers increase the
satisfaction of both parties.
a. Give examples of how individuals and businesses specialize (pgs. 28-29):
a. Individuals __________________________________________________________________________
b. Businesses __________________________________________________________________________
b. Explain how both parties gain as a result of voluntary exchange (pgs. 52-53):
a. Individuals __________________________________________________________________________
b. Businesses __________________________________________________________________________
___________________________________________________________________________________
SSEF4 The student will compare and contrast different economic systems and explain how they answer the three
basic economic questions of what to produce, how to produce, and for whom to produce.
a. Compare command, market, and mixed economic systems with regard to private ownership, profit motive,
consumer sovereignty, competition, and government regulation (pgs. 52 – 55).
Economic Characteristics
Private Ownership
Profit Motive
Consumer Sovereignty
Competition
Government Regulation
Command
Market
Mixed
b. Evaluate how well each type of system answers the three economic questions and meets the broad social and
economic goals of freedom, security, equity, growth, efficiency, and stability (pgs. 23-27).
Economic Characteristics
Economic Freedom
Command
Market
Mixed
Economic Security
Economic Equity
Economic Growth
Economic Efficiency
Economic Stability
What to Produce, How to
Produce, For Whom to
Produce
SSEF5 The student will describe the roles of government in a market economy.
a. Explain why government provides public goods and services, redistributes income, protects property rights,
and resolves market failures.
1) Public Goods and Services (pg. 62)___________________________________________________________
_______________________________________________________________________________________
2) Redistribution of Income (pgs 68 – 70)________________________________________________________
_______________________________________________________________________________________
3) Protection of Property Rights (pg. 52) ________________________________________________________
_______________________________________________________________________________________
b. Give examples of government regulation and deregulation and their effects on consumers and producers
(pgs. 54 -55).
1) Government Regulation ___________________________________________________________________
_______________________________________________________________________________________
2) Government Deregulation _________________________________________________________________
_______________________________________________________________________________________
SSEF6 The student will explain how productivity, economic growth, and future standards of living are influenced by
investment in factories, machinery, new technology, and the health, education, and training of people.
a. Define productivity as the relationship of inputs to outputs (pgs. 108 + 116)
Inputs _______________________________________________________________________________________________
Outputs ______________________________________________________________________________________________
b. Give illustrations of investment in equipment and technology and explain their relationship to economic growth
_____________________________________________________________________________________________________
_____________________________________________________________________________________________________
c. Give examples of how investment in education can lead to a higher standard of living _____________________________
_____________________________________________________________________________________________________