Name_______________________
Period
_____ Note Sheet - BASIC ECONOMIC CONCEPTS
1. Economics - the study of the _____________ _______________ _______________ in an effort to satisfy
their unlimited ___________ and ___________ from ___________________ resources.
2. Product - a _______________ (physical object/tangible) or a _______________ (useful labor/intangible).
Write "G"(good) or "S"(service) for the following products. Watch___, Watch Repair ___, Hamburger ___,
Education ___, Basketball ___, Clothing ___, Bicycle ___, Hair cut ___, Garbage pickup ___.
5. Needs - necessary __________ _______________. (clothing, housing, and food)
6. Wants - goods/services consumed that are ____ ______________ for survival. (Porshe, soccer ball)
7. Factors of production - _______________ (resources) used to _______________ _______________.
8. There are thousands of these inputs, all of which can be grouped under _________________, ______________,
or _______________. The 4rth factor of production is entrepreneurship.
9. Land - (__________ resources) - __________ items. ("Gifts of Nature")
10. Labor (__________ resources) - anyone who works. (labor is "__________ __________.")
11. Capital resources - all "_______-__________ inputs." They include tools, ____________, & _____________.
A. Capital goods - goods used to __________ __________ __________. (hammer, crane, machinery)
B. Consumer goods - products meant for ____________ ____________(satisfied directly) [socks]
12. Can a product be both a consumer and capital good? _____________
l3. Give examples of goods that may be classified as both consumer & capital goods: _________________________
14. Entrepreneurship - starting a __________
__________ or introducing a ___________
__________.
l5. It is the ____________________ who
combines land, labor, & capital to ________
________________(the "boss")
l6. Are the following land, labor, or capital?
______ hammer; ______bark; _______clerk
l7. Trade-offs the __________ or __________ when picking between two or more options.
l8. Opportunity cost - best ____________ _____________(or 2nd choice) [value of the sacrifice]
l9. What is the opportunity cost when you pick a movie over a "Big Mac"?___________________________
Economic Systems
20. The three basic questions are _______, _______, & _______ _______ should products be produced?
(The 3 basic questions determine the type of economic system. (tradition, individual, government)
21. Traditional - looks to the __________. (old customs/traditions important)[where "custom" rules]
22. Pure Command - the __________ controls all __________________. [where "government" rules]
23. Pure Market - _______________ and __________ control all __________[where "individuals" rule]
24. __________ __________ was the Founder of Modern Economics. [He wrote the "The Wealth of Nations"]
25. The "__________ __________" controls the pure market(competition).
26. __________-__________ - "hands off" interference of the government. [no government interference in the economy]
27. Mixed economy - combines elements of __________ & ____________ models. Most nations have this.
28. Capitalism - closest to _______ __________, but has some __________ _______________(U.S.)
29. Democratic socialism - government owns ______ ___(l0%) the factors of production(France).
30. Authoritarian Socialism (_______________) - closest to _______ _____________. The government owns
__________ _______ the factors of production. Communism was born in __________. Father was __________
__________. Marx calls owners _______________ & he calls capitalist workers ________________________.
31. Among the 8 economic goals, give two that are complementary. _______________ & ___________________.
32. Give 2 of the 8 economic goals that are in conflict. ____________________ & ___________________.
33. What does the word enterprise mean? ____________________
34. Are oral contracts binding?_______________
35. Our economic system has (limited/extensive) ___________ government intervention.
36. Developed nations - have access to _______ _______, natural resources, & industry.
37. Developing nations(______ _____ countries) - have _____industry. (over l00)
38. What are the 4 assumptions on a Production Possibilities Curve?
A. _______ efficiency B. _______ resources C. _______ technology D. _______ products
39. A (curve/straight line) _________________ shows the Law of increasing(opportunity) cost.
40. A (curve/straight line) _________________ shows the Law of constant cost["equally substitutable"].
[Answer questions 41-46 by looking at the PPC at the right]
41. At what point is there unemployment(or a recession)? _____
42. At what points are resources being used in their most productive manner?____
[at full employment and full production]
43. At what point is there an improvement in technology, therefore a new PPC?____
44. What kind of frontier line shows the "law of increasing cost"?____
45. What kind of frontier line shows the "law of constant cost"? ____
46. At what point would there be the most economic growth? ____
When moving from "B" to "C", what is given up[opportunity cost]?____
[Answer questions 47-50 by looking at the Circular Flow Model at the right]
47. Which flow represents consumer expenditures(spending)? _____
48. Which flow represents goods and services? ____
49. Which flow represents land, labor, capital,
and entrepreneurial ability?____
50. Which flow represents wages, rents, interests, & profit income? ____
Resource Markets
Businesses
H.Holders
Product Markets
Adam Smith
“Where individuals rule”
“Where custom rule”
Karl Marx
Where “G” rules”