Unit 1 - Economic Theory Ultimate Challenge

Unlimited wants and limited resources.

• scarcity

• opportunity cost

• self-interest

• profit motive

The next best option that you give up when you make a choice.

• scarcity

• opportunity cost

• private property

• customer sovereignty

The basic economic questions:

• What to produce?

• How to produce?

• For whom to produce?

• When to produce?

Economic decisions are made as they have been made in the past.

• Traditional economy

• Command economy

• Market economy

• Mixed economy

Economic decisions are made by the government or other central authority.

• Traditional economy

• Command economy

• Market economy

• Mixed economy

Economic decisions are made by buyers and sellers.

• Traditional economy

• Command economy

• Market economy

• Mixed economy

Some economic decisions are made by buyers and sellers and some are made by the government.

• Traditional economy

• Command economy

• Market economy

• Mixed economy

Which of the following are components of the American Free Enterprise/Mixed Market. (choose all that apply)

• public ownership of all property

• profit motive

• producer sovereignty

• customer sovereignty

• competition

Households are

• buyers in resource markets and sellers in product markets

• buyers in product markets and sellers in resource markets

• buyers in resource markets and product markets

• sellers in resource markets and product markets

Firms are

• buyers in resource markets and sellers in product markets

• buyers in product markets and sellers in resource markets

• buyers in resource markets and product markets

• sellers in resource markets and product markets