Economics Topic 1

What is economics?

• The study of past civilizations

• The study of human behavior

• The study of how people make choices to satisfy their needs and wants

• The study of weather patterns

What is the economic concept of scarcity?

• Unlimited resources for unlimited wants

• Limited resources for unlimited wants

• Unlimited resources for limited wants

• Limited resources for limited wants

How does scarcity affect economic decision-making?

• It reduces the importance of opportunity cost

• It eliminates the need for trade-offs

• It forces individuals to make choices

• It ensures unlimited resources

What is a shortage?

• A temporary lack of resources

• A permanent lack of resources

• An abundance of resources

• A surplus of resources

What are the factors of production?

• Land, labor, capital, and entrepreneurship

• Money, time, effort, and skill

• Water, air, fire, and earth

• Supply, demand, price, and cost

Why is it beneficial for people and businesses to use capital?

• It increases the cost of production

• It decreases efficiency

• It increases productivity and efficiency

• It reduces the need for labor

Why are goods and services scarce?

• Because resources are unlimited

• Because resources are limited

• Because demand is low

• Because production is easy

What does the phrase “guns or butter” represent?

• A choice between military and consumer goods

• A choice between food and clothing

• A choice between technology and agriculture

• A choice between health and education

What is opportunity cost?

• The cost of the next best alternative foregone

• The cost of all alternatives foregone

• The cost of the chosen option

• The cost of production

Opportunity cost:

• can be avoided by wealthy people

• is inherent in all decisions/choices

• can only be expressed in monetary terms

• impacts small businesses more often than large businesses