Unit 1 Review Basic Terms Economic Systems Capitalism & Free Enterprise Economic Goals Government Roles Business Forms

The universal condition affecting all societies and economies requiring decisions and trade offs about production: The universal condition affecting all societies and economies requiring decisions and trade offs about production: Scarcity Scarcity

A good used by consumers as an end product A good used by consumers as an end product Final good Final good

A good used to produce a final good A good used to produce a final good Capital good Capital good Physical capital Physical capital

What are the 4 factors of production? What are the 4 factors of production? Land Land Capital Capital Labor Labor Entrepreneur Entrepreneur

What are the 3 types of capital? What are the 3 types of capital? Physical Physical Financial Financial Human Human

Which would NOT be considered “land”? (write the number only) Which would NOT be considered “land”? (write the number only) 1. A river that is dammed for energy production 2. Wind used to power a windmill to grind wheat into flour 3. Concrete used to lay the foundation for a manufacturing plant 4. An iron ore deposit mined and used to create steal beams for the new World Trade Center #3 #3

Nothing of value is free: Nothing of value is free: TINSTAAFL TINSTAAFL

What term suggests that making something free only shifts the burden of the cost to other shoulders? What term suggests that making something free only shifts the burden of the cost to other shoulders? TINSTAAFL TINSTAAFL

What says that all resources are limited, but have relatively unlimited wants and needs fro them? What says that all resources are limited, but have relatively unlimited wants and needs fro them? Scarcity Scarcity

What is the worth of a product as measured by its price? What is the worth of a product as measured by its price? Value Value

What are the 4 ways to increase productivity? What are the 4 ways to increase productivity? Division of labor Division of labor Specialization Specialization Invest in workers’ human capital (training) Invest in workers’ human capital (training) Invest in technology Invest in technology

Where are the factors of production purchased? Where are the factors of production purchased? Factor market Factor market

A way of improving productivity by organizing labor so that each worker has fewer tasks than before: A way of improving productivity by organizing labor so that each worker has fewer tasks than before: Division of labor Division of labor

A specific representation of a need is called: A specific representation of a need is called: A want A want

Which is NOT a need? Which is NOT a need? 1. House 2. Food 3. Clothing 4. Health #1 #1

Other uses of a resource are sacrificed when one use is decided on. These are called: Other uses of a resource are sacrificed when one use is decided on. These are called: Trade-offs Trade-offs

The capacity of a product to provide its purchaser or user with usefulness and/or satisfaction: The capacity of a product to provide its purchaser or user with usefulness and/or satisfaction: Utility Utility

What does a production possibilities frontier demonstrate? What does a production possibilities frontier demonstrate? The opportunity cost between two products (or areas of production) The opportunity cost between two products (or areas of production)

Due to this, decisions about what to produce, how to produce it, and how to allocate it must be made: Due to this, decisions about what to produce, how to produce it, and how to allocate it must be made: Scarcity Scarcity

Which is LEAST likely a capital (physical) good? Which is LEAST likely a capital (physical) good? 1. An extension ladder 2. A taxi cab 3. An industrial oven 4. A factory 5. An intercom system 6. A CD player #6 #6

When labor is arranged to improve productivity by assigning those better at a task the responsibility of performing that task: When labor is arranged to improve productivity by assigning those better at a task the responsibility of performing that task: Specialization Specialization

Where are productive resources (such as labor) bought and sold? Where are productive resources (such as labor) bought and sold? Factor market Factor market

The term that describes the benefit received from the use of a product: The term that describes the benefit received from the use of a product: Utility Utility

The cost of the next best alternative use of a resource is called: The cost of the next best alternative use of a resource is called: Opportunity cost Opportunity cost

What term best describes the federal government decision to cut military spending under President Clinton to increase federal funding of various social programs? What term best describes the federal government decision to cut military spending under President Clinton to increase federal funding of various social programs? Opportunity cost Opportunity cost Trade-off Trade-off

What best describes Henry Ford’s use of the assembly line to increase productivity? What best describes Henry Ford’s use of the assembly line to increase productivity? Division of labor Division of labor

Which basic economic system is LEAST able to adapt, change, and improve standards of living for its people? Which basic economic system is LEAST able to adapt, change, and improve standards of living for its people? Traditional Traditional

Which econ system deals with scarcity by relying on central planning by government agencies? Which econ system deals with scarcity by relying on central planning by government agencies? Command Command

Which system provides the most ineffective incentives to work hard, save and invest? Which system provides the most ineffective incentives to work hard, save and invest? Command Command

Which system provides least for its unproductive members? Which system provides least for its unproductive members? Market Market

Which system satisfies consumers most? Which system satisfies consumers most? Market Market

Which system requires the largest bureaucracy? Which system requires the largest bureaucracy? Command Command

Which is an example of a market system? Which is an example of a market system? 1. N. Korea 2. Australia’s aborigines 3. China 4. England #4 #4

Which BEST describes the U.S.? Which BEST describes the U.S.? 1. Pure market economy 2. Command economy 3. Mixed traditional economy 4. Mixed market economy 5. Centrally planned economy #4 #4

The private ownership of the factors of production: The private ownership of the factors of production: Capitalism Capitalism

What characteristic of a free enterprise system acts as collateral for entrepreneurs to access financial capital to start businesses? What characteristic of a free enterprise system acts as collateral for entrepreneurs to access financial capital to start businesses? Private property rights Private property rights

Which free market characteristic acts as the motor to the economy and as an incentive for workers to work hard, save, and invest in hopes of improving their economic conditions? Which free market characteristic acts as the motor to the economy and as an incentive for workers to work hard, save, and invest in hopes of improving their economic conditions? Profit motive Profit motive

What 4 benefits to consumers does competition tend to produce? What 4 benefits to consumers does competition tend to produce? Lower prices Lower prices Better products Better products Greater variety of goods and services Greater variety of goods and services Improved use of resources to cut costs Improved use of resources to cut costs

What is the condition of a free market that suggests that all transactions benefit both seller and buyer? What is the condition of a free market that suggests that all transactions benefit both seller and buyer? Voluntary exchange Voluntary exchange

When productive resources are privately owned and operated: When productive resources are privately owned and operated: Capitalism Capitalism

What characteristic of a free enterprise system allows for experimentation and innovation within the market? What characteristic of a free enterprise system allows for experimentation and innovation within the market? Economic freedom Economic freedom

At about what percent of unemployment do economists consider an economy to be functioning at full employment? At about what percent of unemployment do economists consider an economy to be functioning at full employment? 5% 5%

Which economic goal do most Americans share that provides the elderly with Social Security and the poor with a variety of welfare services? Which economic goal do most Americans share that provides the elderly with Social Security and the poor with a variety of welfare services? Economic security Economic security

What is a general rise in prices throughout the economy? What is a general rise in prices throughout the economy? Inflation Inflation

Who does inflation hurt most? Who does inflation hurt most? Those on fixed incomes Those on fixed incomes

“Equal pay for an equal day’s work” is best reflected in which economic goal? “Equal pay for an equal day’s work” is best reflected in which economic goal? Economic equity Economic equity

What is the necessary result of not being able to have absolute economic freedom and, at the same time, absolute economic equity or security? What is the necessary result of not being able to have absolute economic freedom and, at the same time, absolute economic equity or security? Trade-offs among competing goals Trade-offs among competing goals

What role is the government playing when it passes public disclosure laws requiring companies to post nutrition information? What role is the government playing when it passes public disclosure laws requiring companies to post nutrition information? Providing a legal/social framework Providing a legal/social framework

What role is being played when the government passes and enforces anti-trust laws? What role is being played when the government passes and enforces anti-trust laws? Enforcing competition Enforcing competition

When California decides to spend more on education and law enforcement, state government is engaged in: When California decides to spend more on education and law enforcement, state government is engaged in: Providing public goods and services Providing public goods and services

When the government requires a company to reduce the amount of fluorocarbons it emits into the atmosphere, it is engaged in: When the government requires a company to reduce the amount of fluorocarbons it emits into the atmosphere, it is engaged in: Correcting for negative externalities Correcting for negative externalities

When the government employs fiscal policy tools to fight inflation, what role is it playing? When the government employs fiscal policy tools to fight inflation, what role is it playing? Stabilizing the economy Stabilizing the economy

What role is the government playing when it prosecutes violators of patents and copy rights? What role is the government playing when it prosecutes violators of patents and copy rights? Protecting private property Protecting private property

What business form is the most numerous in the U.S.? What business form is the most numerous in the U.S.? Proprietorship Proprietorship

What business form has the disadvantage of double taxation? What business form has the disadvantage of double taxation? Corporation Corporation

What form accounts for 90% of all sales in the U.S.? What form accounts for 90% of all sales in the U.S.? Corporation Corporation

What form has the greatest amount of control by owners? What form has the greatest amount of control by owners? Proprietorship Proprietorship

What business form is Disney and Target? What business form is Disney and Target? Corporation Corporation

What is it called when the personal assets of the owners of a company cannot be used to satisfy the debts of a corporation? What is it called when the personal assets of the owners of a company cannot be used to satisfy the debts of a corporation? Limited liability Limited liability