Chapter 1 Review __________________ is the study of how people seek to satisfy their needs and wants by making choices. A physical object such as a shirt, CD, or Ipod is called a ______________. ______________ exists when there is a limited quantity of resources to meet unlimited wants. Land, labor, and capitol are all ___________________________. Human made objects used to create goods and services are called _________________. A ______________ is something that is necessary for survival like food, or shelter.

A situation in which a good or service is unavailable is known as a _________________. _________________ is a factor of reproduction from which we get all natural resources. ____________________ is the knowledge and skills a worker gains through education and experience. _____________ are leaders who combine land labor and capitol to create and market new goods and services. A ________________ is an item that we desire but that is not essential to survival. ________________ are actions or activities that one person performs for another.

____________ is the effort that people devote to a task for which they are paid. Any human made resource that is used to create other goods and services are called ________. Alternatives that we give up whenever we choose one action of course over another is called __________________. __________________ is when one decides whether or not to add or subtract another unit. The term used to decide whether or not a country decides to invest in military goods or consumer goods is called _________________. The most desirable alternative given up as a result of a decision is called an ______________.

A ____________ helps you to determine whether you are willing to accept the opportunity cost of a choice you are about to make. A graph that shows the alternative ways to use an economy’s productive resources is called a ___________________. _______________ occurs when the economy uses fewer resources than what it is capable of using. ___________ is the alternative we give up when we choose one option over the other.

_____________ occurs when the entire production possibilities increase or “Shift to the right.” Using resources in such a way as to maximize the production or output of goods and services is called ___________________. A ____________________ is a graph that shows when a country is using all of its resources to use a maximum combination of two products. The _________________ states that as one production switches from one item to another more and more resources are necessary for the production of the second item. Therefore the costs increase.

A country’s production possibilities depends on its ________________ and _____________ it has available.

Chapter 1 Review Notes A haircut, a dress being made, or baking a cake is an example of a Service Scarcity involves a limited quantity (i.e. you can’t get any more). Shortage occurs when producers will not or can not offer goods and services at current prices. Trade –offs always require a sacrifice.

In order for something to be an opportunity cost what is given up has to be something desirable. Making a decision at the margin means comparing the costs to the benefits. If the benefits outweigh the opportunity costs one unit is added. If the opportunity costs outweigh the benefits one unit is subtracted.

Efficiency maximizes production. Underutilization under uses available resources. Technology level and Resources determine a country’s production possibilities.