Economics Unit 1 Study Guide
The following topics are meant to help you focus while preparing for the test. This is not an all
inclusive list.
Chapter 1
Needs vs. Wants
Goods and Services
Factors of Production
3 Economic Questions
Scarcity
Trade-Offs
Decision Making Grids
Thinking at the Margin
Opportunity Cost
Paradox of Value and Utility
Value
PPC – know the graph, how to plot points, meaning behind location of points, PPC shifts, etc.
Chapter 2
Types of Economic Systems – differences, review the things we did in class, etc.
- Command, Mixed, Market, Traditional
Adam Smith – division of labor, self-interest, invisible hand, etc.
Circular Flow Diagram - what is exchanged in the product and factor markets, role of government, etc.
Chapter 3
The Free Enterprise System – basic characteristics
Role of the Government
Public Goods
Market Failure
Tragedy of the Commons
Determined by
Survival and needs of
the tribe or village
Determined by
Traditional
economy
Customs and beliefs
passed down
Determined by
Self, family, fellow
tribe members