Exam (elaborations)
Economics Chapter 1: Test
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Economics Chapter 1: Test
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Economics Chapter 1: TestWhat is a comparative advantage, and how is it found? - When it produces a product relatively
more efficiently, - determined by the opportunity cost
What is Scarcity? - Condition of not having enough resources to satisfy wants
What is Economics? - The study of how people try to satisfy unlimited wants with limited
resources
Difference Between Wants and Needs - Needs are required for living out day-to-day activities,
and Wants are not required
What is TINSTAAFL? Why is it true? - "There Is No Such Thing As A Free Lunch"
True, because the money is always coming from somewhere
What are the tree basic questions? - What to Produce? ; How to Produce? ; For Whom?
How must society choose with "What to Produce?" - The people choose what to produce
(Consumers)
How must society choose with "How to Produce?" - Companies choose the most efficient
ways
How must society choose with "For Whom?" - Who ever had the ability to buy it, based on
income
What are the factors of production? - Land, Capital, Labor, Entrepreneurship
Describe the factor of Land - any natural resource found in/on the land
, Describe the factor of Capital - goods that are used to make other services
Describe the factor of Labor - people to work to produce things
Describe the factor of Entrepreneurship people to take risks with their money, in hopes of
- profit
What is production? - the result of taking the factors and turning them into goods and services
What is Wealth? - the accumulation of goods that are scarce, useful, and transferable, from one
to another.
What are markets? - a place where people go to buy goods and services
What is a factor market? What do they center on? - Where productive resources are bought
and sold ; center on businesses
What is a product market? What do they center on? - Markets where good and services are
bought and sold ; Center on goods and services
What is Productivity? - what you get out of what you put in ; a measure of the amount of
output produced by a given amount of inputs in a specific period of time
What may improve productivity? - specialization and division of labor
Why does investing in human capital improve productivity? you are improving worker's
- health, ability, motivation, and knowledge
Explain how economic growth depends in productivity. - Occurs when a nations total output
amount of a good or service, that a nation can produce, grows, and leads to higher living
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