Economics – Chapter 1 Answers – Flashcards
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Because it involves the study of people
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Why is economics considered a social science?
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Because it uses many tools of analysis to explain how the economy works
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Why is economics considered a science?
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How people choose to satisfy their wants and why they make the decision they do.
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What do we consider as an ongoing concern of economics?
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If there were a magic genie that can give you anything you want forever.
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At what scenario would study of economics not exist?
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Food, clothing and housing. Anything that occurs over and over.
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What is physical want?
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As you grow older the what you eat and what you wear changes.
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What changes with physical wants?
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The wants that are not necessary to exist but makes people feel better or happier.
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What is psychological want?
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Wanting to wear designer clothes or owning a special car.
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Provide an example of psychological want?
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When we want more and more.
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How do physical and psychological wants get mixed up in our minds?
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The steps involved in producing what a "human want"
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What is the "Want Satisfaction Chain"?
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1. Human Want 2. Need 3. Production 4. Distribution 5. Consumption 6. Satisfaction
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What are the steps in "Want Satisfaction Chain"?
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The process that combines economic resources so the result is a good or service.
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What is production?
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the process of getting a product or service to consumers.
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what is distribution?
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Using a product or service.
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What is consumption?
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Human wants
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What begins the "Want satisfacton chain"
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Consumption
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What ends the "Want satisfaction chain"?
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Resources
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What is the basic element used to produce goods and services?
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Natural, human and capital
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What are the 3 types of productive resource?
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unaltered gifts of nature such as oil, minerals, timber and fresh water.
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What are natural resources?
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Land
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What are natural resources also known as?
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the physical and mental effort people use to create the goods
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What are human resources?
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Labor
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What are human resources also known as?
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The buildings, tools and machines people use to create goods.
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What are capital resources?
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the truck that delivers the clothes to the store.
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Give an example of capital resource?
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Capital
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What type of resources would this be - A computer used to deliver information
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Labor
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What type of resource would this be - A programmer who creates a software.
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Land
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What type of resource would this be - The wood used to build houses
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Factors of production
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What do economist call land, labor and capital?
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Entrepreneurship
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What do economists call the 4th factor of production?
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The skills needed to start and operate a business.
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What is entrepreneurship?
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Imagination, innovation and management
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What are the type of skills needed for an entrepreneur
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Entrepeneurs
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_____________ is important to the success of a business and the US Economy.
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The gap between what people want and the resources available to produce it.
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What is gap scarcity?
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The inequality between want and resource available to satisfy them.
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What is scarcity?
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SCARCITY = WANTS > AVAILABLE RESOURCE
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What is the formula for Scarcity?
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meet the need for it.
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A resource is scarce only when there is not enough to
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it is NOT scarce
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If small amount of resource is available but it is not wanted then......
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the highest valued alternative given up as a result of making a choice.
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what is opportunity cost?
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The family cannot use the trip money to purchase TV.
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Example of opportunity cost: If a family decides to go on trip but also need flat screen tv.
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you cannot use the work time to study.
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Example of opportunity cost: if you work after school and have a test to study
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Economics is a method, an apparatus of the mind, a technique of thinking.
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What did John Maynard Keynes said about economics?
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Choice-making
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_________is the initial step in explaining much of human behavior and in understanding of economics.
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scarcity
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What forces people of "choice-making"?
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