Ch. 1 Economics Review

What is the main economic problem? 

• too many resources

• scarcity

• not enough needs

• all of the above

What does scarcity mean? 

• people are scared

• there is not enough of something

• too much of something

 Because of scarcity of resources, what do we, producers and consumers, have to make?

• choices

• money

• product

What is unlimited and endless in economics?

• resources

• needs & wants

• raw materials & labor

• goods and services

What is limited in economics?

• resources

• needs

• wants

What does opportunity cost mean?

• it is idea that scarcity is an economic problem

• it is what a person gives up when they make a choice

• it is that choices have benefits

Why must people make choices about the things they desire? 

• people's wants are unlimited, but the resources available to satisfy them are scarce

• wants are ever changing, so people must substitute new items for old ones

• people must satisfy their needs first because they cannot afford to satisfy all of their desires

• producers use the same resources to make different kinds of items

An important characteristics of entrepreneurs is that they

• take risks to create new kinds of businesses

• expand distribution systems to reach more consumers

• make a profit by investing in existing industries

• develop new products but do not market them

Adam Smith is considered the father of

• Philosophy

• business

• economics

 In The Wealth of Nations, Adam Smith,

• explained why the government of the homeland should control trade with its colonies

• argued in favor of mercantilism

• said that both buyer and sellers benefit from a free market