Topics: Economics, Opportunity cost, Economic system Pages: 7 (1267 words) Published: September 30, 2013
Standards/Elements addressed by the Unit 1 test:

SSEF1 The student will explain why limited productive resources and unlimited wants result in scarcity, opportunity costs, and tradeoffs for individuals, businesses, and governments. a. Define scarcity as a basic condition that exists when unlimited wants exceed limited productive resources. b. Define and give examples of productive resources (factors of production) (e.g., land (natural), labor (human), capital (capital goods), entrepreneurship). c. List a variety of strategies for allocating scarce resources. d. Define opportunity cost as the next best alternative given up when individuals, businesses, and governments confront scarcity by making choices.

SSEF2 The student will give examples of how rational decision making entails comparing the marginal benefits and the marginal costs of an action. a. Illustrate by means of a production possibilities curve the trade-offs between two options. b. Explain that rational decisions occur when the marginal benefits of an action equal or exceed the marginal costs.

SSEF3 The student will explain how specialization and voluntary exchange between buyers and sellers increase the satisfaction of both parties. a. Give examples of how individuals and businesses specialize. b. Explain that both parties gain as a result of voluntary, non-fraudulent exchange.

SSEF4 The student will compare and contrast different economic systems and explain how they answer the three basic economic questions of what to produce, how to produce, and for whom to produce. a. Compare command, market, and mixed economic systems with regard to private ownership, profit motive, consumer sovereignty, competition, and government regulation. b. Evaluate how well each type of system answers the three economic questions and meets the broad social and economic goals of freedom, security, equity, growth, efficiency, and stability.

SSEF5 The student will describe the roles of government in a market economy. a. Explain why government provides public goods and services, redistributes income, protects property rights, and resolves market failures. b. Give examples of government regulation and deregulation and their effects on consumers and producers.

SSEF6 The student will explain how productivity, economic growth, and future standards of living are influenced by investment in factories, machinery, new technology, and the health, education, and training of people. a. Define productivity as the relationship of inputs to outputs. b. Give illustrations of investment in equipment and technology and explain their relationship to economic growth. c. Give examples of how investment in education can lead to a higher standard of living.

Specific content/skills tested on this test that are included but not limited to:

Assessment of this domain will focus on the following:
- importance of scarcity to the study of economics
- limited vs. unlimited resources
- differences between economic wants and economic needs
- importance and characteristics of natural, human, and capital resources - role of entrepreneurs in production and distribution
- reading and interpreting scenarios, tables, production possibility curves, and graphs related to opportunity costs (trade offs)
- reasons for and significance of specialization
- identifying and analyzing examples of specialization
- reasons for and benefits of voluntary exchange
- effects of investments in capital and human resources on productivity, economic growth - economic systems
- specialization and voluntary exchange
-marginal analysis and rational decision-making
- role of government in a market economy
-productivity, economic growth and future standards of living

SSEF1 The student will explain why limited productive resources and unlimited wants result in scarcity, opportunity costs, and tradeoffs for individuals, businesses, and governments.

1. What is scarcity?
Scarcity is...
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