The Study of How Firms, Nations, and Individuals Best Allocate Their Limited Resources
Unit 1: Economic Choices TEST Review
Directions: Go back through your assignments and notes to make sure you have all this information in order to be prepared for the test on WEDNESDAY. You can use your notes…but practice rational behavior. Consolidate your notes! My advice is to use the Class Notes off my website (Econ Choices) to review and make a “crib” sheet. You must complete the 3 bullet points below to get credit for this page in the portfolio. Questions 1 through 19 are the things you need to know, but you do not HAVE to complete the review sheet for a grade.
- Write a one sentence summary of how YOU would define “economics”.
- Write a one sentence summary of how YOU would define the “factors of production”.
- Write a sentence using the word “incentive”.
- The study of how firms, nations, and individuals best allocate their limited resources is called what? (p.s. if you don’t know what “allocate” means…look it up!)
- Be able to spot examples of the four factors of production: Land, Labor, Capital, Entrepreneurship. (sometimes, “land” is also known as what?)
- What are the 3 choices all societies have to make (and can you spot those as examples?)
- What is rational behavior?
- What’s the point of a cost/benefit analysis?
- What is the difference between a “need” and a “want”?
- What is the basic economic concept that indicates there are always going to be wants that we cannot fulfill?
- What is the profit motive?
- Be able to recognize examples of opportunity costs and trade offs. (they are different!)
- Who is affected by scarcity in societies?
- Know the difference between the producer of goods and services and the consumer of goods and services.
- Know the difference between a good and a service.
- Be able to recognize examples of the following:
- Fixed costs
- Variable costs
- Total costs
- Marginal costs
- Know the formulas for calculate marginal costs (and what that means) and also total costs.
- Know factors businesses take to increase productivity: (examples: training, automation, robotics, assembly lines, etc). Key concept: paying workers more, firing workers, lowering the costs of products DOES NOT increase productivity. Productivity refers to “output” of more and more products.
- What is human capital?
- Be able to recognize examples of the “Invisible Hand Theory”. Who came up with this theory?
- Be able to spot examples and characteristics of the 4 types of economic systems: traditional, command, market and mixed.
- What are the 5 sectors of the economic flow and how do they work together to keep the economy moving? (examples!)