Topic 1 Quiz Review

Economics

The study of how people seek to satisfy their needs and wants by making choices

Goods

Physical objects such as shoes or clothes

Scarcity

Limited quantities of resources to meet unlimited wants

Entrepreneur

Ambitious leader who combines land, labor, and capital to create / market new goods or services

Services

Actions or activities that one person performs for another

If Country X is producing at Point C, it is using all its resources as efficiently as it can?

True

The opportunity cost of producing more guns is constant

False

Producing at point C is the most preferable

False

The economy of Country X can produce at point E

True

The economy of Country X is producing at its current potential at points A,B,and C

True

A decrease in the number of available labor might shift the curve towards point D.

False

Producing at point E means that some resources have disappeared and are no longer available.

False

New technology that makes both products more efficiently will shift the curve towards point D.

True

An item that we desire but that is not essential to survival

Want

Something like air, food, or shelter that is necessary for survival

Need

A situation in which a good or service is unavailable at the current price

Shortage

Natural resources that are used to make goods and services

Land

The effort that people devote to a task for which they are paid

Labor

Any human-made resource that is used to create other goods or services

Capital

All human-made goods that are used to create other goods or services

Physical Capital

The skills and knowledge gained by a worker through education and experience

Human Capital

An alternative we sacrifice when we make a decision

Trade-off

The name of the alternative that is given up as the result of a decision

Cost

When shifting resources from making one product to another, resources are used less efficiently

Law of Increasing Costs

Graph that shows alternative ways to use an economy’s resources

Production Possibilities