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UNIT 1: ECONOMICS REVIEW
What is Economics
?
Economic Concepts
Economic Systems
and Goals
Capitalism and
International Trade
Production
Possibilities Curve
100 100 100 100 100
200 200 200 200 200
300 300 300 300 300
400 400 400 400 400
500 500 500 500 500
Q: The condition that results from society not having enough
resources to produce all the things people would like to have.
100
Q: What are the three basic questions we must answer about the ways our limited resources
will be used?
300
A: 1. Land-refers to the “gifts of nature,” or natural resources.
2. Capital-the tools, equipment, machinery, and factories used in the
production of goods and services.3. Labor-people with all their efforts,
abilities, and skills.4. Entrepreneurs-a risk-taker in search of
profits who does something new with existing resources.
400
Q: Economics is the study of human efforts to satisfy what appear to be
unlimited and competing wants through the careful use of relatively scarce
resources. As such, it is a social science because it deals with the behavior of
people as they deal with this basic issue. There are four key elements to this study. NAME and DESCRIBE these
elements.
500
A: 1. Description-Gross Domestic Product (GDP)-the dollar value of all final goods and services, and structures
produced within a country’s borders in a 12-month period 2. Analysis-answers the questions…Why are price of some
items high whole others are low? Why do some people earn higher incomes than others? How do taxes aff ect
people’s desire to work and save?3. Explanation-A way to communicate knowledge
determined through analysis to others to create a common understanding
4. Prediction-The study of economics can help to make the best decision in various situations. The study of what is or
what tends to be can help predict what may happen, as well as likely consequences of diff erent courses of action.
500
A: Consumer goods-intended for final use by individuals
Capital goods-used to produce other goods and services
100
A: the accumulation of those products that are tangible,
scarce, useful, ad transferable from one person to another.
200
A: Describes the contradiction between necessities and value.
The situation where some necessities, such as water, have little monetary
value, whereas some non-necessities, such as diamonds, have a much higher
value. Describes the contradiction between necessities and value.
300
A: Which part of the circular flow model deals with individuals
selling land, labor, capital, and entrepreneur abilities to the
businesses for income?
400
A: Division of Labor – work is arranged so that individual workers do fewer tasks than
before.Specialization – when factors of
production perform the tasks they can do relatively efficiently.
500
A: Protection from such adverse economic events as layoffs and illness. States have
set up funds to help workers who lose heir jobs. Many employers have
insurance plans to cover the injuries and illnesses of their workers. On the national level, Congress has set up Social Security
which is a federal program of disability and retirement benefits that covers most
working people.
100
A: 1. Economic Freedom 2. Economic Effi ciency
3. Economic Equity4. Economic Security5. Full Employment
6. Rice Stability7. Economic Growth
8. Future Goals
300
A: Advantages: 1. Sets forth certain economic roles for all members of the community. 2. Stable, predictable, and
continuous life. Disadvantages: 1. Discourages new ideas
and new ways of doing things 2. Stagnation and lack of progress 3. Lower
standard of living
400
AQ: Advantages: 1. Capable of dramatic change in a short time 2. many basic
education, public, health, and other public services available at little or no cost
Disadvantages: 1. Does not meet wants and needs of consumers
2. Lacks effective incentives to get people to work 3. Requires large bureaucracy, which
consumes resources4. Has little flexibility to deal with small, day-
to-day changes 5. New and different ideas discouraged, no room for individuality
500
A: 1. Protective Tariff- a tariff high enough to protect 2.
Revenue Tariff- a tariff high enough to generate revenue for
the government without prohibiting imports
100
A: 1. Economic Freedom 2. Private Property Rights 3.
Voluntary Exchange 4. Profit Motive 5. Competition
200
A: 1. Heavier Health Inspections 2. Licenses to import 3. Health
issues (i.e. Some countries refuse to import genetically
altered crops.) 4. Nationalism
300
A: The North America Free Trade Agreement is an agreement to
liberalize free trade by reducing tariffs among the three major
countries of Canada, Mexico, and the United States. Main gals are to
stimulate economic growth and provide a variety of products to all
nations involved.
400
A: 1. Protector (Enforces laws against false and misleading advertising, unsafe food and drugs,
environmental hazards, unsafe automobiles, and laws against individual freedoms.) 2. Provider and Consumer (Defense services,
education, public welfare, parks, libraries, and bus services.)3. Regulator (Preserving
competition in the market place, interstate commerce, communications, and eve entire
industries such as baking and nuclear power.) 4. Promoter of National Goals (Reflects the will
of the majority. i.e. social goals)
500
Q: The Production Possibilities Curve is a popular model that economists use to illustrate
what major concept? Define this concept.
200
A: Opportunity Cost-the cost of the next best alternative use of money, time, or resources when one choice is made rather than
another
200
Q: Draw a Productions Possibilities Frontier Curve on
the board and label.. (A.) Maximum production (efficient) (B.) Inefficiency (C.) Economic Growth (not possible given out
current resources)
300
A: 1. Absolute Advantage-when a country can produce a product more efficiently (with greater output per unit of input) than another country2. Comparative Advantage-when a
country can produce a product relatively more efficiently, or at a
lower opportunity cost.
400
Q: Using the graph to be drawn on the board, determine who
has the absolute and comparative advantages.
500