Civics Ch. 18 Section 1 Define the following terms: 1. Economics 2. Needs 3. Wants 4. Scarcity 5. Economy 6. Economic models 7. Assumptions Answer each of the following questions correctly: 8. What is economics? 9. What is the basic economic problem that makes choices necessary? 10. What is an economic model? 11. What is the purpose of the economic model? 12. On what do economists base their economic models? 13. Why don’t economic models always accurately predict economic behavior? 14. How do you think the study of economics can help you become a better decision maker? 15. Provide 3 examples of items you have had to do without because limited resources could not keep up with your wants. 16. Study the chart on page 408. If a company decides to use mass production methods that require more equipment and fewer workers, the company is addressing which question? 17. How do our wants differ from our needs? Give an example. 18. What are the questions a society must ask because of scarcity? 19. Explain the following: Because scarcity exists, we must make choices. 20. On what do economists base their models? 21. Why is the quality of an economic model no better than the assumption on which the model is based? Civics Ch. 18 Section 2 Define the following terms: 1. Trade-off 2. Opportunity cost 3. Fixed costs 4. Variable costs 5. Total costs 6. Marginal cost 7. Marginal revenue 8. Marginal benefit 9. Cost-benefit analysis Answer each of the following questions correctly: 10. What does making a trade-off require you to do? 11. In what way is a marginal benefit related to economic choice? 12. Identify a large purchase you would like to make. What are the trade-offs involved and what are the criteria you use to evaluate the alternatives? Illustrate your decision in a grid including the following: alternatives—criteria 1—criteria 2 13. Study the graph on page 413. Should the farmer plant more than 15 acres? Why? 14. What must you take into account when making an economic decision? 15. What do economists call the next best alternative that had to be given up for the one chosen? 16. How do fixed costs differ from variable costs? 17. How do you calculate the total costs of a business? 18. What are the two key measures of revenue that businesses use to decide what amount of output to produce? 19. What is the purpose of a cost-benefit analysis? 20. What are the 3 basic economic questions? Why are the answers to these questions vital to economics? Civics Ch. 18 Section 3 Define the following terms: 1. Market economy 2. Capitalism 3. Free enterprise 4. Incentive 5. “Carrots” 6. “Sticks” 7. Rational choice 8. Microeconomics 9. Macroeconomics Answer each of the following questions correctly: 10. Why is a market economy called a participatory economy? 11. What kind of economy does the U.S. have? How do we know the U.S. has this kind of economy? 12. What are the 3 different types of incentives? 13. Provide 2 examples of incentives. 14. Provide 1 example of a government incentive. 15. How does the government reward certain consumer behaviors? 16. How does the government punish certain consumer behaviors? 17. What is the ultimate goal of being an economically literate citizen? 18. Explain the importance of the consumer in a market economy. 19. It is said that wise decision making not only benefits the individual, but society as a whole. Explain why is this true? 20. Do all rational consumers think alike? Explain why is this so? 21. Look at the photo on page 405. Write a caption for the photo that includes the terms rational and incentive. 22. Explain how microeconomics affects macroeconomics.