What Is Economics? Test Questions – Flashcards
Unlock all answers in this set
Unlock answersquestion
A fundamental economic problem facing all societies. A condition that results from having scarce resources and unlimited wants of people.
answer
Scarcity
question
A social science that studies how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants.
answer
Economics
question
A basic requirement for survival. Food, water, shelter.
answer
Need
question
Something that is desired, but not necessarily needed.
answer
Want
question
What, How, Who. Each society has to decide what to produce with their scarce resources, and how they are going to produce it. Finally, they need to decide who gets what is produced.
answer
Basic Economic Questions
question
Land or natural resources, labor or human resources, capital resources are the machines used for the production, and entrepreneurship will bring the factors together. All four parts are necessary.
answer
Factors of Production
question
The dollar value of all production within a country's borders.
answer
Gross Domestic Product (GDP)
question
Products made the individual consumption
answer
Consumer Goods
question
Products manufactured to make other goods or services
answer
Capital Goods
question
Work done for you. You don't usually receive a good. Ex. Auto repair
answer
Services
question
Worth of a good or service as determined by the market
answer
Value
question
A measure of satisfaction. Variable
answer
Utility
question
A place where buyers and sellers make exchanges
answer
Market
question
A simplified model that shows how business firms, individuals, money, resources, goods, and services flow through our economy.
answer
Circular Flow Model
question
Where the factors of production are exchanged in the circular flow model
answer
Factor Market
question
Where goods and services are exchanged in the circular flow model
answer
Product Market
question
A nation's total output of goods and services increases over time. The circular flow gets larger
answer
Economic Growth
question
A measure of the amount of output produced by a given amount of inputs in a specific period of time.
answer
Productivity
question
Production tasks broken down into smaller parts. Should allow for workers to specialize and increase production
answer
Division of Labor
question
Famous economist believed in the invisible hand guiding the economy to help nations become wealthy. Also laissez faire, division of labor, and specialization
answer
Adam Smith
question
Belief that the government should have minimal interference with business.
answer
Laissez-faire
question
The market acts to help people make wise decisions. Businesses have to make and sell products that are needed or wanted to be able to be successful and allow for a healthy growing economy.
answer
Invisible hand
question
Alternatives that must be given up when something is chosen.
answer
Trade-off
question
The cost of the next best alternative when making a choice. 99% of students that came to school today say that their next best alternative was to be sleeping.
answer
Opportunity Cost
question
An economic model that shows what is possible to produce given a set of circumstances.
answer
Production Possibilities Frontier
question
An economic system where the basic economic questions are answered the way they always have been.
answer
Traditional Economy
question
An economic system where the basic economic questions are answered by the government.
answer
Command Economy
question
An economic system where the basic economic questions are answered in the marketplace by buyers and sellers.
answer
Market Economy
question
The rising of prices
answer
Inflation
question
A system where private citizens own the factors of production
answer
Capitalism-Free Enterprise
question
People are free to choose how to use the factors of production
answer
Economic Freedom
question
A trade made in which both parties benefit
answer
Voluntary exchange
question
The ability to own property allows people to use it for their own benefit. Fundamental for free enterprise
answer
Private Property Rights
question
Making money is the driving force behind the creation and continued development of products in the market place. Fundamental for free enterprise
answer
Profit Motive
question
Helps create better quality products and lower prices. Fundamental for free enterprise
answer
Competition
question
The customer is always right. Products will only be successful if they are wanted in the market place.
answer
Consumer sovereignty
question
An economic system that combines elements of different economic systems
answer
Mixed economy
question
The U.S. economy is mostly free enterprise, but is mixed with elements of other economic systems.
answer
Modified private enterprise economy
question
Common production possibilities for wartime
answer
Guns v. Butter
question
Alaskan National Wildlife Refuge
answer
ANWR
