Economics: Unit 1 Review

What is economics?

• supply and demand

• how money flows through society

• fulfilling our wants in a world of scarcity

• the science of working and saving

Scarcity

• forces society to make choices

• is not a problem for wealthy countries

• only affects the poor countries

• makes all societies better off

Which one is a capital good?

• Sugar that goes into candy

• A cash register in a supermarket

• A refrigerator in your home

• Leather used to make a jacket

Which is NOT a factor of production?

• Entrepreneurs

• Natural resources

• Intermediate goods

• Tools and machinery

An intermediate good for candy would be:

• sugar that goes into the candy

• a worker who adds ingredients

• a mixing machine to make the candy

• store shelves that display the candy

Which does NOT increase productivity?

• A) hiring more workers

• B) more capital available for workers

• C) division of labor

• D) technological advancements

An example of human capital:

• Technologically advanced androids

• Office space and factories

• Training and education

• Washington D.C.

Which is NOT one of the three basic questions?

• How to produce?

• For whom to produce?

• Who owns productive resources?

• What to produce?

Market economies are characterized by:

• government control of property

• private property rights and price incentives

• an unlimited quantity of resources

• scarce resources and price controls

Adam Smith said this guides the free market.

• paradox of value

• welfare capitalism

• conspicuous consumption

• invisible hand