Economics Unit 1 Test Foundations

Match

• people who start businesses

• Entrepreneurs

• what is given up when making a choice

• Cost Benefit Analysis

• Physical items created for selling

• Opportunity Cost

• Actions or activities done for buyers

• Goods

•  listing out the pros & cons of a choice

• Services

Match

• What you spend when you make a choice

• scarcity

• Study of how people make choices to meet

• Economics

• What you gain when you make a choice

• tradeoffs

• What is given up when you make a choice

• benefits

• All resources are in limited supply

• costs

Match

• something that motivates you to act

• factors of production

• land, labor, capital

• inputs

• goods and services produced by inputs

• incentives

• resources used to make a product

• outputs

• Considering benefit of one unit

• thinking at the margin

match

• Human capital and physical capital

• physical capital

• Expertise skills & knowledge of laborers

• capital

• All natural resources

• land

• Effort and time put into producing somet

• labor

• Man-made machines, and tools used

• human capital

match the types of economies

• all decisions made by the government

• Traditional

• decisions made by individuals & govern.

• Free Market

• uses customs to determine what is made

• Command

• no government intervention at all

• Mixed

7 Principles of Economics:

1. ​ (a)   Forces Tradeoffs

2. 2. ​ (b)   vs. Benefits

3. 3. Thinking at the ​ (c)  

4. 4. ​ (d)   Matter

5. 5. Trade Makes People Better Off

6. 6. Markets Facilitate Trade

7. 7. ​ (e)   Consequences Matter

• Future
• Scarcity
• Margin
• Costs
• Incentives

7 Principles of Economics

1. Scarcity Forces Tradeoffs

2. 2. Costs vs. ​ (a)  
   3. ​ (b)   at the Margin
   4. Incentives Matter

3. 5. ​ (c)   Makes People Better Off

4. 6. ​ (d)   Facilitate ​ (e)  

5. 7. Future Consequences Matter

• Benefits
• Trade
• Markets
• Thinking

What is a sunk cost?

• A sunk cost is a cost that has already been spent and cannot be recovered.

• A sunk cost is an investment that yields guaranteed returns.
• A sunk cost is a cost that can be recovered if the project is continued.
• A sunk cost is a future expense that can be avoided.

Which is an example of a sunk cost situation? (Different from your project?)

• Buying a non-refundable concert ticket and choosing not to go.
• Buying a new car and selling the old one.
• Investing in a stock that has increased in value.
• Paying for a subscription service and using it regularly.