Name__________________________________________________Period_______Date______________
Economics
CH 1: What is Economics?
Study Guide
30 Total Points
24 Vocabulary = 12 pts
16 Questions = 18 pts
Section 1: Scarcity and the Factors of Production
Vocabulary: Define or describe each term (7 pts)
1. Economics –
2. Need –
3. Want –
4. Goods –
5. Service –
6. Scarcity –
7. Shortage –
8. Factors of Production –
9. Land –
10. Labor –
11. Capital –
12. Physical Capital –
13. Human Capital –
14. Entrepreneurs –
Section 1 Questions (10 pts)
1. What is the difference between a shortage and scarcity?
2. What special advantages does physical capital offer?
3. Why might an economist look at hundreds of cars moving along an assembly line and say, “There is
an example of scarcity”?
4. Economists use the phrase ______________________________________ to describe the trade-offs
a country is forced to make when choosing between military and consumer production.
5. Which factor of production is represented by each of the following?
a. An office building _______________________________
b. An assembly line worker _______________________________
c. A tree used to make paper _______________________________
d. Unused soil _______________________________
e. An artist _______________________________
f.
A student _______________________________
Section 2: Opportunity Cost
Vocabulary: Define or describe each term (2 pts)
1. Trade-off –
2. Guns or Butter –
3. Opportunity Cost –
4. Thinking at the Margin –
Section 2 Questions (3 pts)
1. Suppose you can save $50 by buying your car in a different city. If the trip requires only $10 in
gasoline, explain why the trip can be worthwhile or not? (Trade-off and Thinking at the margin)
a. Worthwhile –
b. Not worthwhile –
2. (Complete) All decisions involve _________________________ because we must give up some
alternatives when we choose a certain course of action.
Section 3: Production Possibilities Curve
Vocabulary: Define or describe each term (3 pts)
1. Production Possibilities Curve –
2. Production Possibilities Frontier –
3. Efficiency –
4. Underutilization –
5. Cost –
6. Law of Increasing Costs –
Section 3 Questions (5 pts)
1. What does country’s Production Possibilities depend?
2. How is underutilitization depicted on a Production Possibilities Frontier?
3. How does a Production Possibilities Curve illustrate how efficient an economy is?
4. How does a Production Possibilities Curve illustrate Opportunity Cost?
5. What three important pieces of information can we learn by reading a Production Possibilities
graph?