Unit I – Scarcity & Choices

1. Unit I – Scarcity & Choices

2. Provide an example of a good.

4. Provide an example of a service.

6. Explain the difference between a good and a service.

7. Good • Physical objects • Objects that are tangible • Service • Actions or activities that one person performs for another

8. List the 3 Factors of Production.

9. Land • Labor • Capital • Physical Capital • Human Capital

10. Understand the differences between the 3 Factors.

11. Land • Natural resources that are used to make goods and services

12. Labor • The effort that people devote to a task for which they are paid

13. Capital • Any human-made resource that is used to create other goods and services

14. Understand the difference between physical and human capital.

15. Physical Capital • Machines, tools, and buildings that are used to produce other goods and services • Human Capital • Skills and knowledge gained by a worker through education and experience

16. “Human capital is as much a part of the wealth of nations as factories, machinery, and other physical capital.” Economist - Gary Becker

17. Support your opinion on which is more important to a nation’s economy, physical or human capital.

18. Explain how a business would use the 3 Factors of Production to make a product.

19. Identify and explain the importance of at least 3 personal characteristics common to successful entrepreneurs.

20. Evaluate the importance of entrepreneurs in our society.

21. Discuss the “Economizing Problem” that causes scarcity.

22. “We have UNLIMITED WANTS, but LIMITED RESOURCES.” • This causes the scarcity of everything.

23. Explain situations in your life that involved opportunity costs and be able to identify and explain why they are your opportunity costs.

24. Opportunity Cost • The most desirable alternative given up when a making a decision.

25. Explain the economic reasoning behind a making a choice.

26. Whenever people decide whether thebenefitsof a particular action are likely to outweigh itscosts, they engage in a form of benefit-cost analysis.... • Benefit > Cost • Do It!!! • Benefit < Cost • Don’t Do It!!!

27. Explain what an incentive is.

28. A reason for doing something • 3 types from Freakonomics • Moral • one acts out of conscience or conviction • Social • actions are related to shame • Economic • people act in their financial interest.

29. Provide examples of how incentives affect people’s decisions.

30. Construct a correctly labeled a PPC curve.

31. Consumer Goods Capital Goods

32. Illustrate where a society is operating efficiently in regards to the PPC curve.

33. A B C Consumer Goods D Capital Goods

34. Illustrate where a society is underutilizing its resources in regards to the PPC curve.

35. Consumer Goods X Capital Goods

36. Illustrate where a society is operating at an unsustainable level in the short run in regards to the PPC curve.

37. U Consumer Goods Capital Goods

38. Identify 3 reasons why a PPC curve may shift.

39. Change in Quantity of Resources Available • Increase in Quantity; Curve shifts to the Right • Change in Quality of Resources Available • Increase in Quality; Curve shifts to the Right • Change in Technology • Increase in Technology; Curve shifts to the Right

40. U A B C Consumer Goods X D Capital Goods