Economics Midterm

What basic choices faced by all societies?

• The society might face scarcity issues leading it to make tough decisions.

• Each society must decide WHAT to produce, HOW to produce it , and FOR WHOM to produce it.

• We all have wants and needs, but have limited resource.

• A need is a basic requirement for survival. A want is something we would like to have, but it’s not necessary for survival.

What is the definition for scarcity?

• Apparent contradiction between the high value of a nonessential item and the low value of an essential item.

• Monetary worth of a good or service as determined by the market.

• To change the nature of something.

• Fundamental economic problem facing all societies resulting from a combination of scarce resources and people’s unlimited needs and wants.

What is the social science dealing with how people satisfy seemingly unlimited and competing needs and wants with the careful use or scarce resources?

• Economics

• Economic growth

• Specialization

• Economic interdependence

How can simple models help us understand a complex economy?

• Improving the efficiency, or productivity, of the factors of production results in market growth.

• Simple models reduce complex situations to basic elements so they can be more easily analyzed and understood.

• It represents various combinations of goods and services an economy can produce when all its resources are in use.

• All of the consumer actions listed relate back to the business. In addition, the consumer actions help future consumers.

How does cost-benefit analysis help make economic decisions?

• The wages and salaries that people receive from businesses in the factor markets return to businesses in the product markets.

• As an individual spending on goods and services in the product markets.

• It is a way of comparing the benefits of an action to the expected costs.

• Having more productive resources or increased productivity make it possible for the economy to grow.

True or False: A durable good is a good that lasts for at least three years when used regularly.

• True

• False

True or False: A consumer good is a tool, equipment, or other manufactured good used to produce other goods and services; a factor of production.

• True

• False

True or False: A nondurable good is an item that wears out, is used up, or lasts for fewer than three years when used regularly.

• True

• False

True or False: A good is a tangible economic product that is useful, transferable to others, and used to satisfy wants and needs.

• True

• False

Why must producers make production choices?

• Consumers can select and customize their own criteria and compare a number of different alternatives to make the choice best for them.

• There would bs a scarcity of items.

• Education provides knowledge and skills that employers value, and they will pay higher wages for those skills.

• Producers must make production choices because of scarcity, or limited factors of production.