Flashcards in PreAP Economics and Choice Test Deck (20)
What is economics?
the study of how individuals and societies satisfy their unlimited wants and limited resources.
What is the difference between a need and a want?
-Needs are things needed for survival (food, water, clothing, shelter)
-Wants are desires that can be satisfied by consuming a good or service.
What is the difference between a good and a service?
-Goods are physical products businesses produce. (scissors, brush, TV)
-Services are activities performed that satisfy people's wants or needs. (hairdresser, teacher, mechanic)
What is the difference between a producer and a consumer?
-a Producer is one who makes goods or provides services. (hairdresser, teacher, TV company)
-a Consumer is one who purchases goods or services.
what is scarcity?
the result of an inability to satisfy unlimited wants with limited resources.
-fundamental and ongoing tension that confronts individuals, businesses, governments and societies
What does it take to be a successful entrepreneur?
a combination of vision, skill, ingenuity and willingness to take risks that is needed to create and run a new business.
What 3 questions must society ask when faced with scarcity?
1. What is being produced?
2. How will it be produced?
3. For whom will it be produced?
What are the 5 steps in the PACED decision making model?
P- define the Problem
A-list the Alternatives
C-detirmine the Criteria
E-Evaluate the alternatives
D-make the Decision
What is an opportunity cost?
the best alternative given up when making a choice
What are trade offs and incentives?
trade offs- a choice that involves giving up some of one thing to have more of another
incentives- the reasons for increasing profit, interest, wages and rent.
What is the Production Possibilities Curve?
a graph that shows the impact of scarcity on an economy.
What does a point on the curve represent?
the best use of resources
What does a point inside the curve represent?
a possible use of resources
What does a point outside the curve represent?
an IMpossible use of resources
What is the most important factor in making an economic decision?
What are the 4 factors of production?
Human, Capital, Natural and Entreprunial Resources
Describe Human resources
-includes time, effort, and talent that go into making products or services
Describe Capital Resources
-all resources made and used by people to produce and distribute goods and services
-includes tools, machinery, offices, warehouses, roads, factories, etc. (man-made)
-money is not a capital resource
Describe Natural Resources.
-all natural resources found on or under ground that are used to produce goods or services.
-includes water, forests. wildlife, minerals, gas, oil, etc.