You can use your copied notes on the test.
CHAPTER ONE
STUDY GUIDE
ECONOMICS
Matching/True
False
1.
Microeconomics:
How individuals make choices (Micro=small)
2.
Financial capital:
money used for investment
3.
Opportunity costs:
How important the thing is that you gave up
4.
Natural resources:
provided by nature
5.
Consumers:
Buyers
6.
Scarcity:
not enough of something, it is permanent
7.
Human resource:
any exertion by a human physical or mental
8.
Need: required for
survival
9.
Want: luxury item
that you don’t need for survival
10. Producers:
Sellers
11. Trade
Off: To
choose one thing over another
12. Macroeconomics:
How nations make choices
13. Capital
Resource: product you already own to help make other
products
14. Shortage:
a temporary lack of something
15. Specialization:
When you become an expert at what you do
16. Rationing:
Not enough of something and the government limits what you can get/buy
17. PRODUCTION
POSSIBILITY CURVE (CHART)
a.
Increases: Moves to the Right
b.
Decreases: Moves to the Left
18. LACK
OF SOMETHING:
a.
Scarcity is
a permanent lack of something
b.
Shortage is a temporary
lack of something
19. Financial
Capital: Extra Money you can invest in a business
20. If
you use your car to deliver pizza it makes your car a capital resource
21. TRUE:
The cold war was between the US and Soviet Union (USSR)
22. Since
we have more teachers… it is an example of Division of labor and
specialization
23. If
you are becoming more efficient in your factory you are elimination WASTE.
CHAPTER
ONE
Economics
SECTION ONE
ECONOMICS
The study of how
individuals and nations make choices about ways to use resources to satisfy
needs and wants.
Microeconomics
How individuals make choices
Micro
(small)
Macroeconomics
How
nations make choices
MAKING
DECISIONS
We make economic
decisions everyday… even if to save or spend.
CONSUMERS
Those
that buy (YOU & ME)
PRODUCERS
Those
that make the items or provide the service
WANTS
Not
necessary for survival, LUXURY
Can
become almost a necessity (phone, job, car)
NEEDS
Required
for survival Ex. Food, Water Shelter
GOODS
Objects
that can be purchased
SERVICES
Actions
or activities performed for a fee
Examples:
Teachers, lawyers, piano teacher, electrician
RESOURCES
Anything
people use to make or get what they want or need
FACTORS
OF PRODUCTION
Anything you do to
make a product or provide a service
NATURAL
RESOURCES
Provided
by nature
Examples-
Trees, water, coal, diamonds, fish
HUMAN
RESOURCES:
Any human effort
exerted in the human production process (in production)
·
Crossing Guard
·
Interpreting
·
Teacher
·
Construction
CAPITAL
RESOURCE:
When you use property
that you already own to make other products or provide services
·
Products
·
Money
·
Home Daycare
·
Desks
FINANCIAL
CAPITAL
Money you can invest in
a business
ENTREPRENEUR
Risk Taker, someone who
is willing to go out on his or her own and take a risk.
ENTREPRENEURSHIP
Start
your own business
Fred Smith: Fed Ex
SECTION
TWO
SCARCITY AND CHOICE
Not enough of something
Not enough of something
SCARCITY
Permanent
lack of something, won’t get any more every again…
Example: dessert and water
Scarcity
is the most basic problem in economics.
SHORTAGE
Temporary
lack of something- will get more later on
3 BASIC ECONOMIC QUESTIONS
In allocating
(distributing) your resources
1. What to produce? (Make)
a.
What to make? Sunglasses, clothes, cars,
restaurant
b.
Large or small
c.
High Quality or Cheap
2. How to produce? (Make)
a.
By hand or with computerized machines
b.
Do you modernize your plant
3. For Whom? Who are you going to sell it to?
a.
Who will get the products?
b.
Local or shipped out
c.
Upscale stores or discount
PRODUCTIVITY
The level of output
that results from a level of input
(How much are you
getting out of your effort?)
EFFICIENCY
Using
the smallest amount of resources for your largest output… eliminate waste
DIVISION OF LABOR
Instead of a single
person making a complete product they make only part of it and pass it on. (Assembly
Line) You become an expert of what you do.
SPECIALIZATION
Each
employee becomes an expert at one specific task
SECTION
THREE
TRADE OFF
To choose one thing over another
Having to make choices that are
unavoidable (that must happen)
Only you understand the importance
of the thing that you gave up
OPPORTUNITY COSTS
What the next best choice would have been... (WHAT YOU DON’T CHOOSE) The
cost or value of the next best alternative given up…Say Friday night you have
to choose between the basketball game and the movies. Which is more important?
Example: Say you do not go
to the movies, that is your opportunity costs. What do you not choose?
Guns vs. Butter
Normal
Trade Off
Every dollar the government they spend on
military that is GUNS (MILITARY)
Therefore, they could not spend money on BUTTER (HOME STUFF) cancer research, education, roads, and other
things.
BUTTER: Money used to support anything that is not
military in the US.
GUNS: Money spent on military
PRODUCTION POSSIBILITIES CURVE (CHART) PG. 10 in your book
Shows all the possible combinations of 2 goods and services that can be
produced with a given time period Ex. Remember the CAR CHART (making big cars
vs. little cars)
2 Assumptions: Resources and technology will not change.
SHIFTING CURVE:
INCREASE IN PRODUCTION (SHIFTS TO THE RIGHT)
Maybe
making more cars
Maybe
demand is up
Materials
are cheaper
New
technology is introduced to the car plan
IF
I MODERNIZE MY FACTORY… I CAN INCREASE MY PRODUCTION.
DECREASE IN PRODUCTION (SHIFTS TO THE LEFT)
Budget
restraints
Workers
go out on strike (refuse to work)
PROPER
USE OF TAXES
Do you think we should
use tax dollars to put technology in schools, or on space
HOW DO TAX CUTS AFFECT THE ECONOMY?
SPEND-
only if you spend the money that you are saved
SAVE-
Saving money does not help the economy
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