Which of the following is an example of a shortage?

A doll is not available because a limited number were made.

What is the difference between a shortage and a scarcity?

A shortage can be temporary, but scarcity always exists.

What can a decision-making grid do?

show some benefits and costs of a decision

An efficient economy is one that

uses its resources to make the most goods and services.

The economic concept of guns or butter means that

gov't must decide to produce more military or consumer goods

Every decision involves trade-offs because

everyone’s resources are limited.

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1 Econ Ch. 1 Review

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Econ Ch. 1 Review

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Questions 21

Answers

1
If you choose between two colleges, the one you do not choose is the ______ of your decision.
opportunity cost
opportunity at the margin
decision at the margin
trade-off
2
the study of how people seek to satisfy their needs and wants by making choices
law of supply
factors of production
production possibilities curve
economics
3
any human-made resource that is used to produce other goods and services
supply
capital
scarcity
labor
4
Which of the following is an example of a shortage?
Workers are not available because they have other jobs.
A doll is not available because a limited number were made.
A farmer can only water 1 of his 3 fields.
Peanuts are not available because few people want them.
5
What is the difference between a shortage and a scarcity?
A shortage can be temporary, but scarcity always exists.
shortage is from rising prices; scarcity from falling ones
There is no difference between a shortage and a scarcity
shortage is a lack of goods; scarcity concerns a single item
6
What can a decision-making grid do?
compare all benefits of a decision
show all costs and sacrifices of a decision
show what the right decision is
show some benefits and costs of a decision
7
resources that are used to make goods and services
Law of Increasing supply
Shortage
Resources
Factors of Production
8
principle that limited amounts of goods and services are available to meet unlimited wants
marginal cost
scarcity
marginal benefit
shortage
9
An efficient economy is one that
does not face the problem of scarcity.
conserves its resources through underutilization.
creates new resources through research and development
uses its resources to make the most goods and services.
10
use of resources in such a way as to maximize the output of goods and services
efficiency
factors of production
supply
production possibilities curve
11
something people desire that is not necessary for survival
need
supply
desire
want
12
all natural resources used to make goods and services
capital
economy
physical capital
land
13
effort people devote to tasks for which they are paid
labor
wages
efficiency
production
14
the most desirable alternative given up as the result of a decision
opportunity cost
shortage
marginal cost
resources
15
The economic concept of guns or butter means that
a company must decide whether to manufacture guns or butter.
gov't buys unlimited military & civilian goods if it is rich
a person can spend money on either sports equipment or food.
gov't must decide to produce more military or consumer goods
16
What happens as production of one item switches to the production of another item?
More resources are needed.
Land costs rise more than labor costs.
The cost of production stays the same.
The cost of production decreases.
17
something essential for survival
need
want
good
supply
18
Every decision involves trade-offs because
some people have more money.
everyone’s resources are limited.
everyone has to make decisions.
some decisions are made for business, others for society.
19
physical objects that someone produces
human capital
resources
services
goods
20
use of fewer resources than an economy is capable of using
shortage
production possibilities frontier
scarcity
underutilization
21
All goods and services are scarce because
resources are limited.
things are either needs or wants.
greedy people want too many goods.
some goods cost more than others.

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