Fundamental Economic Concepts
1.1 Resources and Wants
1. What is the study of Economics?
2. What are three examples of wants?
3. While wants maybe unlimited, the resources for obtaining them (ex._______________) are not.
Resources
4. What are resources?
5. Given an example of two resources?
6. Give two examples of natural resources?
7. What is the difference between renewable and nonrenewable resources?
8. Given an example of renewable resources?
9. Given an example of nonrenewable resources?
10. Why is oil a nonrenewable resource?
Productive Resources
11. What are the four factor of production?
12. What is the economic definition of land?
13. List three examples of land
14. What is the definition of labor?
15. List three examples of labor
16. What is the definition of capital?
17. List three examples of capital
18. What is the definition of entrepreneurship?
19. List three examples of entrepreneurs
Scarcity
20. What is the definition of scarcity?
21. Why is a Hurricane not scarce?
22. What happens to the price of item if it becomes scarce?
23. What happens to the price or item if it becomes less scarce?
Strategies for Dealing with Scarcity
24. Why does scarcity exist?
25. During Katrina why did gas companies increase the price of oil?
26. Why do producers raise the price of goods when there is a limited supply of the good?
27. List three government regulations for dealing with scarcity?
28. What happens when the government establishes a price ceiling or price floor?
29. Define rationing?
30. Given an example of one time period where the United States had to use rationing?
1.2 Economic Decision Making
31. What must economic actors due as a result of scarcity?
32. The reality of limited resources forces consumers to have to use the _______-________ ________ to help them
pick between goods and services.
Decision-Making Model
33. List the 5 steps in the decision making-model?
34. Your economic problem is……… what should you eat for dinner? List 4 alternative meals
35. List three criteria needed for your meal
36. What is a Trade-off?
37. When picking what you want for dinner, list one trade-off?
38. What is the opportunity cost?
39. When picking what you want for dinner, list the opportunity cost of choosing that item?
40. Finally, what did you pick to eat for dinner?
41. What is the marginal benefit?
42. What is the marginal cost?
43. If the ________________ are greater than the cost, then you have made a rational economic decision.
44. If the ________________ are greater than the benefit, then you have made an bad or unwise decision.
Production Possibilities
Trade-Offs and Production Possibilities
45. Why are trade-offs unavoidable?
46. What is the purpose of the Production Possibility Curve?
47. What does point V on the Production Possibility Curve represent?
48. What does point W on the Production Possibility Curve represent?
49. What does point X on the Production Possibility Curve represent?
50. What does point Y on the Production Possibility Curve represent?
51. What does point Z on the Production Possibility Curve represent?
Specialization and Voluntary Exchange (SPECIALIZATION and DIVISION OF LABOR
52. What is the money that producers make after they have paid all of their costs?
53. How do producers try to maximize their profits?
54. Producers also want to sell their good or service at as _________ a price as consumers are willing to pay.
55. List two ways businesses can increase productivity?
56. Define specialization
57. Define division of labor
58. What happens if each worker specializes and labor is divided at a business?
The Benefits of Voluntary Exchange
59. Define voluntary exchange
60. Consumers want to buy goods at as __________ a cost as possible.
61. When does a voluntary exchange occur?
62. What are 4 benefits of voluntary exchange?
63. Since producers stand to make more profit if they produce more output, they are motivated ________________
______________________.
64. Name one invention that has improved society and voluntary exchange
65. List one example of an innovation that improved society and voluntary exchange
66. How did William Levitt innovate home building?
Fundamental Economic Concepts (Part II)
1.3 Economic Systems
67. What are the three fundamental economic questions?
Traditional Economies
68. In a traditional economy, a persons occupational and social status are_________________________________.
69. In a traditional economy, productivity is motivated by ______________________________________________.
70. Why are traditional economies not longer popular?
Command Economies
71. What is a command economy?
72. In a command economy, who controls what is produced, how much things cost, and how much of a good or
service will be distributed?
73. How is output distributed in a command economy?
74. Why is there little profit motive in a command economy?
75. Why is there little innovation in a command economy?
76. In a command economy, producers must produce what they are ____________, and consumers are limited in
what they can __________ and from __________ they can buy it.
Market Economies
77. In a market economy, who determines what gets made and for whom it’s made?
78. Who controls property or the factors of production in a market economy?
79. What is the motivating factor for producers in a market economy?
80. What is the motivating factor for labors in a market economy?
81. Why does innovation thrive in a market economy?
Mixed Economies
82. A mixed economy is a combination of what two economies?
83. Who controls property or the factors of production in a market economy?
Role of Government in the Market-Economy
84. Why does government play an active role in a market economy?
85. What does government provide in a market economy?
86. Give three examples of public goods or services provided by government.
87. What is redistribution of income in a market economy?
88. Why does government try to resolve market failures in a market economy?
89. List 5 common ways the government tries to regulate the economy?
90. Why does the government try to protect the property rights of the people and businesses?
Deregulation
91. Define deregulation
92. List three way the government regulated the airline industry
93. What are two things that happen when the government deregulates an industry?
94. What are two negatives that happen when the government deregulates an industry?
1.4 Investment
Productivity
95. Define productivity
96. What is the key factor for determining economic growth?
97. Define inputs
98. List two examples of inputs
99. Define outputs
100. List two examples of outputs
101. What must a business do in order to earn a profit?
The Impact of Investment
102. Define investment
103. Define Interest
104. What is one way to increase production in a business?
105. Define capital goods
106. List two examples of investments in capital goods
107. Define human capital
108. List three examples of investments in human capital
109. Educated employees tend to enjoy a __________ __________ __ _________ than less educated workers.