1. What is the fundamental economic problem?
2. What are the three basic economic question all societies must face?
3. What is the relationship btwn scarcity, value, utility and wealth?
4. What relationships are demonstrated through the circular flow of economic activity?
5. Give an example of how trade-offs and opportunity cost are related.
6. What are some decision-making strategies?
Indicate whether the statement is true or false. If false, correct the statement.
____7.When manufactured goods are used to produce other goods and services, they are called capital goods.
____8.A nondurable good lasts for less than five years when used on a regular basis.
____9.Economic growth occurs when a nation's total output of goods and services increases over time.
____10.In economics, land refers to the natural resources needed for production, such as forests, minerals, and climate.
____11.The four factors of production are land, capital, labor, and financing.
____12.Economics is a social science because it deals with how people behave while trying to satisfy their needs and wants through use of relatively scarce resources.
____13.Division of labor increases efficiency because it allows workers to master many aspects of their jobs.
____14.Economic interdependence limits a nation's growth and usually reduces the efficiency of production.
Identify the choice that best completes the statement or answers the question.
____15.The dollar value of all final goods and services and the most comprehensive measure of a country's total production output is |a. |its standard of living. |c. |a cost-benefit analysis. | |b. |financial capital. |d. |Gross Domestic Product (GDP). |
____16.An economy at its production possibilities frontier is operating |a. |with slow economic growth. |c. |without division of labor. | |b. |at full potential. |d. |as a free enterprise economy. |
____17.Actions in one part of the country or world that have an economic impact on what happens elsewhere are examples of |a. |opportunity costs. |c. |specialization. | |b. |trade-offs. |d. |economic interdependence. |
Study the graph. Suppose this nation starts with producing all military goods. It then decides to produce a mix of civilian and military goods represented by point B. What represents the cost in military goods given up?
|a. |the vertical distance between point x and point y | |b. |the horizontal distance between point y and point z | |c. |the horizontal distance between point z and point E | |d. |the vertical distance from point A to point x |
|“It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to | |buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his | |own clothes, but employs a tailor.... All of them find it [in their best interests] to employ their whole industry in a way in which| |they have some advantage over their neighbours, and to purchase...whatever else they...