Chapter 1 What is Economics?

Section 1 Scarcity & The Factors of Production

Key Terms Need-necessary for survival;food, clothing, shelter Want-an item that we desire but is not necessary for survival

More Terms Entrepreneur-ambitious leader who combines land, labor, and capital to create & market new goods and services.

Guns or Butter Consumer or Military Spending

You just saw two examples of… Decision Making Grids

Now You will see….. Production Possibilities Curves A PPC is a graph that shows alternative ways to use an economy’s resources A Production Possibilities Frontier is the line on a graph that shows the maximum possible output

Efficiency….. Using resources in a way as to maximize production

Underutilization… Using fewer resources than an economy is capable of using.

Law of Increasing Costs.. Law that stats that as we shift the factors of production from making one good or service to another, the cost of producing the second good increases.

End of Chapter 1

Answer Questions 1-21 on pages 20-21 NOW Answer Questions 1-21 on pages 20-21