Unit 1 Common Assessment

The study of economics:

• The study of Scarcity & choices.

Why does Scarcity exist?

• We have unlimited wants but limited resources.

What is the value of the next best alternative called when making a decision?

• Opportunity Cost

Point on the curve are?

• efficient

Points inside the curve are?

• Inefficient

Points outside the curve are?

• Not possible.

What causes shifts in PPC’s?

What does “There is no such thing as a free lunch” mean?

• All goods involve a cost to someone and draw scarce resources away from the production of other goods.

What is a mixed economy?

• No economy is pure market, pure command, or pure traditional.

What is the difference between a need and a want?

A need is something that you need and a want is something that a person doesn't need but that they like and want it.

What are the three basic questions of economics?

1. What goods and services will be produced?

2. How will the goods and services be produced?

3. Who are the goods and services for?

Be able to identify goods and services.

• Goods: Are useful, tangible objects (Ex: Laptop, pizza, smartphone)

• Services: Are intangible work performed for someone (Ex: stylist, Uber, UPS, Fed Ex)

List the 4 factors of production.

1. Land

2. Labor

3. Capital (Physical & Human capital)

4. Entrepreneurs

What is human capital?

• Any skills or knowledge gained by a worker through education and experience.

Gave an example of land, labor, capital, and entrepreneurship.

• Land: Water, sun, plants, animals

• Labor: Manual labor, lawyers, doctors, teachers, writer, etc

• Capital:

• Entrepreneurship: Henry Ford, Bill Gates, Inventors, Store owners, etc

What is physical capital?

• Any human-made resources that is used to create other goods and services.

• Examples: Tools, tractors, machinery, buildings, factories, etc.

Be able to label the circular flow of economics.

What does inefficient mean?

What does new technology do to production?

PPC Graph

• A graph that shows alternative ways to use an economy’s resources — does not show consumer satisfaction. It is a model of a Marco economy used to analyze the production decisions in the economy and the problem of Scarcity.

Advantages of the economic system.

Disadvantages of the economic systems.

Marginal analysis rule:

Microeconmics v Macroeconomics.

• MICROeconomics- Study of small economic units such as individuals, firms, and markets.

• MACROeconomics- Study of the large economy as a whole or economic aggregates.