Economics Guided Reading Answers

Topics: Supply and demand, Inflation, Economics Pages: 71 (8248 words) Published: February 24, 2014
ANSWER KEY
Chapter 1
Chapter 1–1

II.D.

the accumulation of those economic products
that are tangible, scarce, useful, and transferable

1. scarcity of resources, which results from society not

III.A.

the market

having enough resources to produce all of the
things people would like to have

III.B.

the markets in which productive resources are
bought and sold

2. A need is a basic requirement for survival and

III.C.

in product markets

IV.A.

the amount of output produced by a given
amount of inputs in a specific period of time

IV.B.

They increase productivity.

IV.C.

Government can help provide education and
health care; businesses can provide training;
individuals can further their own education.

includes food, clothing, and shelter. A want is a
way of expressing a need.

3. “There is no such thing as a free lunch.” It means
that most things in life are not free because
someone has to pay for the production in the
first place.

4. a. What to produce? b. How to produce? c. For
whom to produce?

5. a. land: natural resources not created by humans;
b. capital: the tools, equipment, machinery, and
factories used in the production of goods and
services; c. labor: people with all their efforts,
abilities, and skills; d. entrepreneur: a risk-taker in
search of profits who does something new with
existing resources

Chapter 1–3
1. trade-offs
2. decision-making grid
3. Opportunity cost
4. opportunity cost
5. fully employed

6. the process of creating goods and services

6. production possibilities frontier

7. a. description: We need to know what the world

7. maximum combinations

around us looks like. b. analysis: It helps us to
discover why things work and how things happen.
c. explanation: If we all have a common
understanding of the way our economy works,
some economic problems will be much easier to
address or even fix in the future. d. prediction: It
can help predict what may happen as well as the
likely consequences of different courses of action.

Chapter 1–2
One cannot get enough economic products to
satisfy individual wants and needs

I.B.

A consumer good is intended for final use by
individuals; a capital good is used to produce
other goods and services.

9. opportunity cost
10. production possibilities frontier
11. cost-benefit analysis
12. free enterprise economy
13. standard of living

Chapter 2
Chapter 2–1
1. an organized way of providing for the wants and
needs of people

2. a. The allocation of scarce resources and nearly all

I.C.

work performed for someone

other economic activity stems from ritual, habit, or
custom.

I.D.

a person who uses goods and services to satisfy
wants and needs

Advantages: Everyone knows what role to play.

II.A.

a worth that can be expressed in dollars
and cents

II.B.

the situation in which some necessities have
little monetary value while some non-necessities
have a much higher value

II.C.

utility

Disadvantages: It tends to discourage new ideas
and new ways of doing things; lack of progress
leads to a lower standard of living than in other
types of economic societies.
b. A central authority makes most of the economic
decisions, and people are expected to go along
with the leaders’ choices.
Advantages: It can change direction drastically in a
relatively short time; public services available.

68

Guided Reading Activities

Copyright © by The McGraw-Hill Companies, Inc.

I.A.

8. fully employed

ANSWER KEY
Disadvantages: It is not designed to meet the wants
of consumers; does not give people the incentive to
work hard; requires a large decision-making
bureaucracy; does not have the flexibility to deal
with minor, day-to-day problems; people with new
or unique ideas find it difficult to get ahead.

c. People and firms act in their own best interests;
buyers and sellers can come together in order to...
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