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Economics Test Unit 1 Chapters 1-3

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Any resources that are made by humans and used to create other goods and services are called:
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Capitol
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An example of a shortage is limited amounts of…
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food available because the trucks carry it are on strike.
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The resources used to make all goods and services are the…
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factors of production.
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The purpose of a production possibilities graph is to…
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show alternative ways to use an economy’s resources.
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An efficient economy is one that…
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uses its resources to make the most goods and services.
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The law of increasing costs means that when an economy increases the production of one item,…
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the opportunity costs go up.
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The opportunity cost of a decision can be examined by using a…
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production possibilities graph.
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What is a situation in which a good or service is unavailable?
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shortage
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What are any human-made goods that are used to create other goods and services?
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capitol
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What are natural resources used to make goods and services?
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land
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What is the effort that people devote to a task for which they are paid?
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labor
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What principle states that we have limited quantities of resources to meet unlimited want?
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scarcity
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What is an alternative that we sacrifice when we make a decision called?
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trade-off
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What is the most desirable alternative given up as the result of a decision called?
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opportunity cost
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What occurs when an economy uses fewer resources than an economy is capable of using?
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underutilization
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What is the struggle among various producers for the consumer’s business called?
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competition
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How could the Chinese economy be characterized?
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mixed but on the side of centrally planned
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What incentive motivates a manufacturer to sell a product?
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making profits on sales
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free market philosopher
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Friedrich Engels
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What economist developed the principle of laissez faire?
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Adam Smith
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government makes all decisions on the production and consumption of goods and services
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centrally planned economy
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How do consumers benefit from competition?
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low prices
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What economic principle states that consumers ultimately decides what goods and services get produced?
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consumer sovereignty
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What medical benefit program covers some poor people who are unemployed or not covered by their employer?
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Medicaid
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What medical benefit program provides for the elderly and disabled?
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Medicare
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In what kind of an economy does the government make all decisions?
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centrally planned
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What is the purpose of an economic system?
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to produce and distribute goods and services
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a person who consumes a good or service but does not pay for it
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a free rider
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What is the term for the total value of all goods and services produced in a particular economy?
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gross domestic product
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greatest output of goods and services
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efficiency
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land, labor, and capitol
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factors of production
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temporary lack of one or more goods
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shortage
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the most attractive alternative that is given up when an economic decision is reached
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opportunity cost
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the line that shows different production possibilities for the economy
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production possibilities frontier
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all the possible alternatives that are rejected when a choice is made
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trade-offs
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representation of the possible ways an economy could use resources
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production possibilities graph
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the basic economic condition of all goods and services
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scarcity