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

A: Scarcity

100

Q: “THERE IS NO SUCH THING AS A FREE LUNCH” focuses on what

major concept?

200

A: A cost must be factored in to all decision-making

200

Q: What are the three basic questions we must answer about the ways our limited resources

will be used?

300

A: 1. WHAT to produce2. HOW to produce

3. FOR WHOM to produce

300

Q: NAME and DESCRIBE the four Factors of Production.

400

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

Q: Describe the difference between a consumer goods and capital goods.

100

A: Consumer goods-intended for final use by individuals

Capital goods-used to produce other goods and services

100

Q: Define Wealth

200

A: the accumulation of those products that are tangible,

scarce, useful, ad transferable from one person to another.

200

Q: DEFINE and PROVIDE AN EXAMPLE for the Paradox of

Value

300

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: Factor Markets

400

Q: Division of Labor and Specialization can improve

productivity. Define these two factors.

500

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

Q: Describe Economic Security as a social goal.

100

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

Q: Name and provide an example for each type of

economic system.

200

A: 1. Traditional, Command, and Market Economies

200

Q: Name all 8 economic and social goals.

300

A: 1. Economic Freedom 2. Economic Effi ciency

3. Economic Equity4. Economic Security5. Full Employment

6. Rice Stability7. Economic Growth

8. Future Goals

300

Q: Name 2 total advantages and disadvantages of a traditional

economic system.

400

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

Q: Name 3 total advantages and disadvantages of a command

economic system.

500

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

Q: DEFINE and COMPARE a protective and revenue tariff.

100

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

Q: Name the five characteristics of a “Free Enterprise” or

Capitalist system.

200

A: 1. Economic Freedom 2. Private Property Rights 3.

Voluntary Exchange 4. Profit Motive 5. Competition

200

Q: List at least three other types of barriers to trade other than a

tariff or a quota.

300

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

Q: What is NAFTA stand for and describe it gain goals and

outcomes.

400

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

Q: Name and provide an example for the four Roles of

Government in a Free Enterprise System.

500

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: Define a trade-off

100

A: Alternative choices, whenever an economic decision is made.

100

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:

300

Q: Define both Absolute and Comparative Advantage

400

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

A:

500