________/131 Packet:
Name
Date
Period
________/15 Notes:
Econ Unit 1: Chapter 1-3
________/136
Total Points
-Economic Basic PrinciplesChapter Problem Sets:
Chapter 1 Problem Sets


Chapter 2 Problem Sets
Economic Basics PPF Graph Problem
Set
Opportunity Costs Problem Set

Three Economic Viewpoints Problem
Set
Chapter 3 Problem Sets


Kelo v. City of New London Problem
Set
Providing Public Goods Problem Set
Chapter 1 Materials
Objectives:



Examine the causal relationship between scarcity and the need for choices (12.1.1)
Explain opportunity cost and marginal benefit and marginal cost (12.1.2)
Explain the role of profit as the incentive to entrepreneurs in a market economy (12.2.8)
Preview
Respond to each question. Provide a thorough explanation for each decision.
1.
If you could choose between two nearly identical products—one that is free and one that you have to pay for—which would
you choose? Why?
2.
If you were opening a new business, would you select a location closer to or farther away from a business that sold a similar
or even identical product? Why?
3.
If you could make a small change in your daily routine that would save you time and money, would you make the change?
Why or why not?
Chapter 1 Vocabulary Chart
Term
Need
Want
Economics
Good
Services
Scarcity
Shortages
Factors of Production
Physical Capital
Human Capital
Textbook Definition
Class/Own Sentence
Symbol
Entrepreneur
Trade-off
Guns or butter
Opportunity Cost
Thinking at the
Margin
Production
Possibilities Curve
Growth (not a term,
but you will find it)
Efficiency
Underutilization
Cost
Chapter 1 Questions  Answer the questions as you work through the reading.
1.
Why is the idea of scarcity a starting point for thinking economically?
2.
How is scarcity different from shortages?
3.
List and describe the four factors of production. What is the difference between physical and human capital?
4.
Critical Thinking: Why might an economist look at hundreds of cars moving along an assembly line and say, “There is an
example of scarcity”?
5.
Why must the opportunity cost of a decision always be something desirable?
6.
How do economists use the phrase “guns or butter”?
7.
What does it mean to think at the margin? Give a recent example.
8.
How is underutilization depicted on a production possibilities frontier?
9.
Explain how a production possibilities curve illustrates the efficiency an economy.
10. How does a production possibilities curve illustrate opportunity cost?
11. Critical Thinking: Describe a specific event that would make each of the following happen to a production possibilities
curve:
a.
What is happening with the economy at point “A”?
b.
What is happening with the economy at point
“C”?
c.
Explain the state of the economy at point “B”?
i. What does this tell us about the state of
foreign affairs for this country?
\
d.
Explain why the economy would shift from point
“B” to point “D”.
 D
Chapter 2 Materials
Objectives:

Identify the difference between monetary and nonmonetary incentives and how changes in incentives cause changes in
behavior (12.1.3)
Analyze the role of a market economy in establishing and preserving political and personal liberty (12.1.5)
Explain the role of profit as the incentive to entrepreneurs in a market economy (12.2.8)
Understand the role of government in a market economy (12.3.1)



Preview
Respond to each question. Provide a thorough explanation for each decision.
1.
How do “economies” figure out what to produce?
2.
If I gave you $1,000 right now, what would you spend it on? Explain why.
3.
What does the term “invisible hand” mean to you? Explain why.
Chapter 2 Vocabulary Chart
Term
Economic System
Factor Payments
Patriotism
Textbook Definition
Class/Own Sentence
Symbol
Safety Net
Standard of Living
Market
Specialization
Household
Firm
Factor Market
Profit
Product Market
Self-Interest
Incentive
Competition
Invisible Hand
Consumer
Sovereignty
Socialism
Communism
Laissez Faire
Private Property
Free Enterprise
Transition
Privatize
Chapter 2 Questions  Answer the questions as you work through the reading.
1.
What is an economic system? Use three vocabulary terms in your response.
2.
Complete the following chart. List TWO pros and TWO cons for each!
Type of Economic System
Pro
Con
Traditional Economy




Market Economy




Centrally Planned/Command Economy




Mixed Economy




3.
Why aren’t all people paid the same amount in factor payments for the resources they provide? Give two examples of
uneven factor payments.
4.
Why do governments provide safety nets to their citizens? Explain why you disagree or agree with the use of these systems.
5.
How does specialization make us more efficient?
6.
What is the difference between the factor market and the product market?
7.
What are the roles of households and firms in a market economy?
8.
How does competition among firms benefit consumers?
9.
How do socialism and communism differ?
10. Critical Thinking: Explain what benefits might citizens of a centrally planned economy derive from a move toward a
market-based system?
Chapter 3 Materials
Objectives:






Analyze the role of a market economy in establishing and preserving political and personal liberty (12.1.5)
Explain the roles of property rights, competition, and profit in a market economy (12.2.3)
Explain the role of profit as the incentive to entrepreneurs in a market economy (12.2.8)
Understand the various aspects of government in a market economy (12.3.1)
Identify factors that may cause the costs of government actions to outweigh the benefits (12.3.2)
Describe the aims of government fiscal policies and their influence on production/employment and price levels (12.3.3)
Preview
Respond to each question. Provide a thorough explanation for each decision.
1.
Explain what “free enterprise” means to you. Give an example
2.
How can an economy provide growth and security, or do opportunity costs exist?
3.
What kind of goods does the government provide to us?
4.
Explain how a safety net could be considered a disadvantage in a free market economy.
Chapter 3 Vocabulary
Term
Profit Motive
Open Opportunity
Private Property
Rights
Free Contract
Voluntary Exchange
Interest Group
Public Disclosure
Laws
Public Interest
Public Good
Public Sector
Private Sector
Free Rider
Market Failure
Externality
Textbook Definition
Class/Own Sentence
Symbol
Poverty Threshold
Welfare
Cash Transfers
In-kind Benefits
Chapter 3 Questions  Answer the questions as you work through the reading.
1.
What constitutional guarantees underlie the American free enterprise system?
2.
Explain the importance of the following terms in the U.S. free enterprise system:
Term
Importance
Advantage (x2)
Disadvantage (x2)
Profit Motive
Voluntary
Exchange
Private Property
Rights
Competition
3.
Critical Thinking: What are some opportunity costs of a greater government role in the economy?
4.
Use the following chart to compare Micro/Macro Economics. Include three examples
EXAMPLES (x3)
MICRO
MACRO
ttt
ECONOMICS
5.
How does gross domestic product (GDP) provide a means to analyze economic growth?
6.
What does GDP tell economists about business cycles?
EXAMPLES (x3)
7.
Explain how:
a. Patents and copyrights promote innovation?
b.
Innovation help the economy?
8.
Critical Thinking: Explain how scientific discoveries and technological innovations create the need for rules and regulations
to protect individuals and businesses?
9.
Why is a free rider a type of market failure?
10. What is the difference between the public sector and the private sector? Give an example of each.
11. Critical Thinking: Is the criminal justice system (police and the courts) a public good? Explain.
12. Why does poverty exist in a free market economy?
13. How is Social Security an example of income redistribution?
Unit 1 Closure  This section of the packet is not graded and is done in class.
3.
For the three types of economic systems, draw what you think is the “correct” PPF with the “correct” point A for full
economic efficiency.
Traditional Economy
Mixed Economy
Centrally
Planned/Command
Economy
Graphing a Production Possibilities Frontier (PPF) and connecting it to the business cycle and different types
of economic systems
Follow these steps to create a graph.
 Draw a coordinate system with an x (ALWAYS HORIZONTAL) and y (ALWAYS VERTICAL- the "tail of the Y" goes
down)-axis.
 Examine the data to be graphed (in the table below). Determine an appropriate title for each axis.
 Determine appropriate scale for each axis.
 Graph the data. Remember to always graph “X” first!
 Connect each point to create a curve.
Guns or Butter?
Point
Butter
(X)
A
B
C
D
E
1.
What does this graph tell us about our classroom economy?
2.
What should our class concentrate our efforts on, guns or butter? Explain why.
3.
In your opinion, how is this graph connected to the U.S. economy?
4.
If an economy is producing only guns, where are they getting their butter?
a.
5.
Explain how this effects that relationship among countries.
Based on what we have covered, what do you think the PPF represents as far as employment is concerned?
a.
Explain why this is true.
Guns
(Y)