Scarcity & Basics
What are the three fundamental economic questions?
What to produce, how to produce, for whom to produce
What is a traditional economy based on?
Habit, ritual, or custom
Name the four factors of production
Land, labor, capital, entrepreneurship
What is a free enterprise economy?
Resources are privately owned with limited government control
What is opportunity cost?
The next best alternative given up when making a choice
What is scarcity?
Limited resources to meet unlimited wants
Who makes decisions in a command economy?
Central authority or government
What is “land” in economics?
Natural resources
What does “economic freedom” mean?
Freedom to choose jobs, employers, and production
What does the production possibilities curve show?
Different combinations of goods/services produced
Define economics.
Study of how people use scarce resources to satisfy needs and wants
What drives a market economy?
Supply, demand, and price
What is “capital”?
Tools, machinery, and equipment
What is voluntary exchange?
Buyers and sellers freely make transactions
What is cost-benefit analysis?
Comparing the benefits and costs of a choice
What’s the difference between a want and a need?
Needs are essential for survival; wants are not
What’s a mixed economy?
Combines tradition, government, and markets
Who are entrepreneurs?
Risk-takers introducing new products for profit
What is the profit motive?
Incentive to improve one’s material well-being
When does economic growth occur?
When total output increases over time
What is utility?
The capacity to be useful and provide satisfaction
Give one real-world example of each type of economy.
Mrs. Broome is the judge if you get this right
Give an example of each factor of production in the real world.
Mrs. Broome is the judge if you are correct
What is competition?
The struggle among sellers to attract consumers
Tori can sell simple bracelets, which she can make in 10 minutes, for $5 each, or she can sell complex necklaces that she can make in 15 minutes for $10. She chooses to sell the necklaces.
What is her opportunity cost?
$5