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ECON UNIT 1 TST 2022
Mr. Stickler's Liberty Christian Econ. Unit 1 Test Flashcards 2021
| Question | Answer |
|---|---|
| What does the term "scarcity" mean? | The condition that results from society not having enough resources to produce all the things people would like to have. (Pg. 6) |
| What is the Fundamental Economic Question? | How to satisfy people's seemingly unlimited and competing wants through the careful use of relatively scarce resources. (Pg. 6) |
| What does the term "human capital" refer to? | This refers to the sum of people's skills, abilities, health, knowledge, and motivation. |
| What does the term "land" refer to? | This term refers to any natural resources that can be used to produce a product. (EX: Trees, cotton, etc.) (Pg. 8) |
| What is the "Scope of Economics"? | 1. Analysis; 2. Explanation; 3. Prediction. (Pgs. 9 & 10) |
| What does the term "opportunity cost" relate to? | The cost of the "next best alternative" - or - "the cost of an alternative that must be forgone in order to pursue a certain action". (EX: How many pairs of jeans you have to stop making in order to make T - Shirts.) (Pg. 20) |
| What does a Production Possibilities Curve that is bowed outward show? | It illustrates an example of Increasing Opportunity Costs, which means that you must give up more and more of 1 type of product to make the other. |
| What does the Production Possibilities Curve itself tell us? | The different combinations of two (2) goods that can be produced, given efficient use of all Factors of Production. (Pg. 21 + Class Notes.) |
| What do we know about points that fall "underneath" the Production Possibilities Curve? | These points are called "Possible", but "Inefficient" because we are not using our resources to our best advantage. (Class Notes.) |
| What do we know about points that fall "outside" the Production Possibilities Curve? | These points are called "Impossible" points because we cannot produce goods at those points without altering the Factors of Production (EX: Building a larger factory.) (Class notes.) |
| What is the definition of "wealth" in economic terms? | "The accumulation of products that are tangible, scarce, useful, and transferable from one person to another." (Pg. 14) |
| What are the four (4) Factors of Production? | 1. Land; 2. Capital; 3. Labor; 4. Entrepreneurs. (Pgs. 8 - 9) |
| What are the three (3) basic economic questions? | 1. WHAT to produce; 2. HOW to produce; 3. FOR WHOM to produce. (Pg. 7) |
| What does the term "entrepreneurs" refer to? | This term refers to "a risk - taker in search of profits who does something new with existing resources". In other words, a person who starts and/or owns a business or company. (Pg. 9) |
| What is the difference between "durable" and "nondurable" goods? | Durable goods are goods that last three (3) years or more when used regularly. Nondurable goods are goods that last for less than 3 years when used regularly. (Pg. 13) |
| In economic terms, what is a "service"? Give one (1) example. | A "service" is "work that is performed for someone". One example would be haircuts. (Pg. 13) |
| What is a "good" in economic terms? | A useful, tangible item, such as a book, car, or smart phone, that satisfies a consumer's want. (Pg. 13) |
| When does "economic growth" occur? | When a nation's total output of goods and services increases over time. (Pg. 16) |
| What does the term "productivity" relate to? | It refers to "the amount of goods and services produced with a given amount of resources in a specific period of time". In other words, the total goods or services made/ provided by a company. (Pg. 16) |
| What does the term "free enterprise economy" refer to? | It refers to an economy in which "consumers and privately owned businesses, rather than the government, make the majority of the WHAT, HOW, and FOR WHOM decisions". (Pg. 24) |
| What does the "Diamonds and Water Paradox" state? | This asks the question "Why do diamonds, which are wants, cost so much more than water, which is a need?" (Pg. 14) |
| What is the "solution" to the "Diamonds and Water Paradox"? | The solution to this is that something must be scarce and have utility (or "purpose") in order for it to have value. (Pg. 14) |
| What does "marginal product" indicate? | Computing this tells us information about how efficiently we are using the "factors of production". |
| What are "capital goods"? | These are the tools and machines that people use to create products. |
| When does "specialization" occur? | This occurs when factors of production perform only tasks they can do better or more efficiently than others. |
| What does the "Circular Flow of Economic Activity" show us? | This shows us "the high degree of economic interdependence in our (American) economy". |
| What is one (1) example of "opportunity cost"? | One (1) example of this is if you choose Coke over Pepsi, the opportunity cost of choosing Coke is the Pepsi that you gave up. |
| When does "economic growth" occur? | This occurs when a nation's total output of goods and services increases over time. |
| What does the term "division of labor" mean/ refer to? | This term refers to "a way of organizing work so that each individual worker completes a separate part of the work". |
| What is one (1) thing that Adam Smith stated in the portion of the book "A Wealth of Nations" that we read in class? | Adam Smith stated that people act in their own self-interest in an economic system. |
| What does a "production possibilities frontier" show us? | This diagram shows us the various combinations of goods and services an economy can produce when all its resources are in use. |
| What does the term "standard of living" mean/ refer to? | This relates to the quality of life based on the ownership of the necessities and luxuries that make life easier. |
| What is a "cost - benefit analysis"? | This is a way of comparing the costs of an action to the benefits received. |
| What is an "economic system"? | This is "an organized way in which a society provides for the wants and needs of its people". |
| What is one (1) advantage of a "traditional economy"? | One (1) advantage of this is there is very little uncertainty about what to produce. |
| Who or what makes the Who?, What?, and For Whom? decisions in a "command economy"? | In this type of economy, a central authority - such as the government - makes these decisions. |
| Who or what makes the Who?, What?, and For Whom? decisions in a "market economy"? | In this type of economy, individual consumers dictate these decisions. |
| Who or what makes the Who?, What?, and For Whom? decisions in a "mixed economy"? | In this type of economy, government (or tradition) as well as markets make these decisions. |
| What are "mixed economies"? | These are economies that combine the elements of "traditional", "command", and "market" economies. |
| What is the main advantage of a "command economy"? | The main advantage of this is that it can change direction drastically. |
| What does the term "communism" mean/ refer to? | This term refers to "a political and economic system where all property is owned collectively, not privately". |
| What does the term "socialism" mean/ refer to? | This term refers to "a political and economic system in which the government owns and controls some, but not all, of the basic productive resources". |
| What is one (1) advantage of "mixed economies"? | One (1) advantage of this is that "it provides assistance for some people who might otherwise be left out". |
| What is one (1) disadvantage of "mixed economies"? | One (1) disadvantage of this is that "it tends to provide more services, but the costs for these benefits can mean higher costs for citizens overall". |
| What does the term "minimum wage" mean/ refer to? | This term refers to "the lowest wage that can be paid to most workers". |
| What does the term "social security" mean/ refer to? | This term refers to "a federal program of disability and retirement benefits that covers most working people". |
| What does the term "inflation" mean/ refer to? | This term refers to "a rise in general level of prices". |
| Complete the following sentence: "Economics is all about __________________ and ________________________." | Scarcity and choices. |
| What are the 4 characteristics of "free enterprise capitalism"? | 1.) Economic freedom; 2.) Voluntary Exchange; 3.) Private property rights; 4.) Profit Motive. |
| What does the term "profit motive" mean/ refer to? | This term refers to "the incentive that encourages people and organizations to improve their material well-being". |
| What does the term "modified free enterprise" mean/ refer to? | This term refers to "an economy in which people and businesses carry on their economic affairs freely, but they are subject to some government regulation and intervention". |
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