Economics Midterm Study Guide

The three key economic questions are:

• What should be produced?

  How to produce?

  Who should we produce for?

• How to produce?

  How much do we make?

  What is my profit?

• Who should we produce for?

  What is my profit?

  What should we charge for the product?

• How much do we produce?

  Who should we produce for?

  What is the tax?

What is economics?

• The study of a government's distribution of resources

• The study of consumers' spending habits

• The study of a society's allocation of resources

• The study of buying and selling in the stock market

Scarcity can best be defined as

• Scarcity can best be defined as

• Where demand is greater than supply

• Unlimited wants vs Limited resources

• Limited wants vs unlimited resources

 The major types of resources used to make a product are called  

• natural resources

• factors of reduction

• factors of production

• capital resources

A popular bakery has only a few ingredients left to make their products.  They could bake muffins or cookies, but they can’t make both.  The bakers decide to make cookies for their customers.  

What is the opportunity cost of their decision?

• muffins

• cookies

The Welch family has saved some money.  They can spend it on a vacation to the Grand Canyon or build a swimming pool in their back yard.  They decide to spend the money on a swimming pool.

 What is the opportunity cost of their decision?

• vacation

• swimming pool

When I choose one item over another because I cant afford both, this is called an ...

• scarcity

• opportunity cost

• choice

• incentive

 What is the fundamental problem of economics? 

• How to keep consumers out of debt?

• How to fulfill our unlimited wants and needs with limited resources?

• How to figure out the way to make the most money?

• How do we ensure all people get a college education?

Soil, minerals, air, water, and coal are all examples of

• Fossil fules
• Conservation
• recycling
• natural resources

A person that takes a risk by starting a new business.

• human capital
• capital goods
• entreprenuer
• tariff