Final Review: Topics 1 and 2

A production possibilities curve shows the relationship between the production of:

What does the process of specialization do for an economy?

relies on custom, habits, and rituals.

North Korea, United States, Singapore.

Most countries in today’s world have this type of economy

What is the difference between a shortage and scarcity?

little room for innovation or change; not willing to try new technology.

Why does the U.S. government intervene in the economy?

What causes a production possibilities curve to move to the right?

households and firms are the main participants in this system.

What do people supply in return for factor payments?

created by Adam Smith, who wrote “The Wealth of Nations”

What must a nation’s economy do in order to improve the standard of living?

developed behind the idea of “The Invisible Hand”

government owns the factors of production.

The purpose of a production possibilities graph is to:

found in modern day Central America, Africa, and Asia.

What does “consumer sovereignty” mean in a free market economy?

opposes free market pricing, competition, and private property.

innovation is not rewarded, thus stunting economic growth.

What is one way human capital contributes to economic development?

individuals take part in voluntary exchange in markets.

agriculture and hunting lie at center of people’s beliefs and laws.

You will still get public TV whether or not you pay for it. You don't contribute. This is a:

Any resources made by humans and used to create other goods and services are called:

The lower half where firms pay households for land, labor, and capital is called: 

Human capital includes:

market-based system where government is involved to some degree.

government decides what is produced, how it is produced, and who consumes goods and services.