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Chapter 1- Q1. Identify the cause of scarcity having limited resources to meet the needs and wants of the people. Chapter 1- Q2. List the 3 basic economic questions that every society must face What to produce How to produce For whom to produce. Chapter 1- Q3.
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Chapter 1- Q1 Identify the cause of scarcity having limited resources to meet the needs and wants of the people
Chapter 1- Q2 List the 3 basic economic questions that every society must face What to produce How to produce For whom to produce
Chapter 1- Q3 Describe the factors of production Land- the land itself and all of its natural resources Capital- computers, tools and equipment Labor- workers or employees Entrepreneurs- people who have ideas
Chapter 1- Q4 Explain why economics is a social science It deals with people’s behavior as they cope with the allocation of resources
Chapter 1- Q5 Describe the relationship between goods, services and consumers Consumers use goods and services to satisfy their wants and needs
Chapter 1- Q6 Explain why services are excluded from the measure of wealth Because they don’t change or they are intangible
Chapter 1- Q7 Distinguish between products market and factory markets Product market are the producers who can offer deals or sales on goods and services Factory markets is where the products are made
Chapter 1- Q8 Explain why economists argue that productivity is important Productivity is an efficient use of your resources so you can maximize profit
Chapter 1- Q9 Describe the nature of an opportunity cost The cost of the next best alternative use of money, time, or resources when one choice is made rather than another
Chapter 1- Q10 Identify the economic concept illustrated by the production frontier Opportunity cost
Chapter 1- Q11 Describe incremental decision making Making a decision in small steps so that the decision can be reversed without too much being lost
Chapter 1- Q12 Explain why economic education is important It helps people become better decision makers
Chapter 2- Q1 Describe the main strength and weakness of a traditional economy Strength- everyone knows which role to play Weaknesses- discourages new ideas and new ways
Chapter 2- Q2 List 5 major weaknesses of the command economy Does not meet the needs and wants of the people Lacks effective incentives for people to work hard Requires a large gov’t that consumes resources Has little flexibility No new ideas
Chapter 2- Q3 Describe how a market economy, command economy, and a traditional economy adapt to change Traditional- punishes those who try to change how things are done Command- problems arise because of inflexibility Market- flexible and can adapt to change
Chapter 2- Q4 Describe the seven major economic goals which most Americans agree on Economic freedom- freedom to make one’s own decision Economic efficiency- recognition that resources are scarce and need to be used wisely Economic equity- belief that the economy should be managed justly, impartially, and fairly Economic security- protection from efforts of adverse economics events Full employment- desire for the system to provide enough jobs Price stability- desire for stable prices Economic growth- the idea of flexibility that looks for better ways to produce goods and services
Chapter 2- Q5 Explain how society resolves the conflict among goals which conflict The system is set up to be flexible, allows choices and accommodates change
Chapter 2- Q6 State how people and business benefit from economic freedom Choosing an employer Where and when they want to work Business try to hire the best people
Chapter 2- Q7 Explain the importance of the entrepreneur in a free enterprise economy Entrepreneurs bring new ideas Leading to economic growth More jobs and more money
Chapter 2- Q8 Provide examples of how the gov’t acts as protector, provider, and consumer of goods and services, regulator, promoter for national goods Protector- enforces laws against false advertising Provider and consumer- provides highways, and uses productive resources Regulator- oversees interstate commerce Promoter of goals- minimum wage promotes equity
Chapter 3- Q1 Explain the strengths of a sole proprietorship Ease of establishment Ease of management Owner keeps all profits No separate taxes Ease of getting out of business
Chapter 3- Q2 Identify the weakness of a partnership All partners equally responsible for business loss Limited business life Potential for conflicts between partners
Chapter 3- Q3 Explain the structure and strengths of a corporation Structure A board of directors Elected by owners of common stock Set board policiesand goals Strength ease of raising money Ability to hire best managers Ease of transfer of ownership
Chapter 3- Q4 Explain how the firm obtains, and then disposes of, its cash flow Cash flow is obtained by adding net income to non-cash chargers. A firm map pay this sum back to the owners or reinvest in itself
Chapter 3- Q5 Describe the difference between a horizontal and vertical merger Horizontal merger: 2 or more firms that produce the same product join forces Vertical merger: firms in the different steps of manufacturing stage join forces.
Chapter 3- Q6 Explain why a corporation might choose to become a conglomerate Its overall sales and profits will be protected from isolated economic happenings
Chapter 3- Q7 Describe the difference between a nonprofit institution and other forms of business organizations Nonprofits do not seek financial gain
Chapter 3- Q8 List 3 examples of cooperative associations. Consumer: a food co-op Service: a credit union Producer: a farmer’s co-op
Chapter 3- Q9 Describe the purpose of a labor union To work for its members’ interests
Chapter 3- Q10 Identify 3 types of business or professional organizations American Bar Associations Chamber of commerce Better Business Bureau
Chapter 3- Q10 Compare the direct and the indirect roles of government Direct role: producer and consumer of goods and services Indirect role: regulates, makes payments to individuals
