What is capital? 

Any resources made by human and used to create other goods and services 

 The resources used to make all

goods and services is called what? 

factors of production 

 What is the purpose of a production

possibilities curve? 

 to show alternative ways to use an economy's resources 

 An economy that uses its resources

to make the most goods and services would be considered ____________

efficient 

 What does a guns or butter decision involve? 

 increased military spending or increase societal programs 

On what type of graph would you examine the opportunity cost of a decision? 

 production possibilities graph 

 Why are all goods and services scarce? 

 All resources are scarce 

 What is the difference between scarcity

and shortage? 

 shortages are temporary

scarcity always exists 

 What is physical capital?  Give an example. 

 the knowledge and skills a worker gains

use of stethoscopes 

What is an entrepreneur?

 ambitious leaders who decide how to

combine the factors of production.

 What things does an economist

consider to be land? 

 actula land, natural resources, water 

Describe a centrally planned economy. 

Gov't controls every aspet of the econ. 

 Why do producers compete? 

to make profits 

why do producers compete?

to make profits

 What are the three key economic

questions?

 What, How and Who

 How does specialization benefit

an economy?

Makes it efficient

Describe a traditional economy.

Little surplus, little trade

subsistance farming

What happens in a product market?

Households purchase the goods and services

that firms produce

What happens in a factor market?

firms purchase the factors or production

from households

 What is the function of an economic system?

 to produce and distribute goods

and services

 Why does the government offer safety nets?

 to help those who experience

 financial difficulties

What is the basic principle for the

 law of demand?

 What does a shift in the demand

curve indicate?

 Change in quantity demanded at every price

What table lists how much we would buy

at different prices?

 Demand schedule

How is future price related to

current demand?

See #31

 What is the different between a maket

demand schedule and a demand schedule?

Market demand schedule - all consumer's

demand

demand schedule - 1 person's demand

What is the basic principle behind the

law of demand?

as price goes up demand goes down

as price goes down demand goes up

 How does income affect a consumer's

purchase of inferior and normal goods?

up income: down inferior, up normal

down income: up inferior, down normal

 When looking at a demand

 schedule,what is the

only thing that is taken into account

when that schedule is made?

 Price

List several things that could cause a shift

in demand

 Income, consumer expectation and taste,

population, advertising

 How does the future expectation of

 prices affect the demand curve?

expect up price, current demand up

expect down price, current demand down

 What is the basic principle

 behind the law of supply?

 as price is up, supply is up

as price is down, supply is down

 How does the government influence supply?

 subsidies, taxes, regulation,

future expectation

of prices

How does the future expectation of  prices affect the supply curve?

 expect up price, current supply down

expect down price, current supply up