ECONOMIC TEST CHAPTER 1,2,3,4
What is Economics? - answer- The study of how peoples need to satisfy their needs
and wants by making choices.
What are the three factors in every Economic scenario - answer- Land, Labor, Capital
What is a trade-off? - answer- All the alternatives that we give up whenever we choose
one course of action over another.
What is a production Possibilites curve/What does it show? - answer- A graph that
shows al alternative ways to use an economy's productive resources. Axes shows
different products. example= shoes and watermelon.
What are the three economic questions. - answer- What goods and services should be
produced? How should these goods and services be produced? Who consumes these
goods and services?
Why are the three economic questions important? - answer- Because economic
resources are limited.
What are the tree types of economies. Be able to explain each, advantages and
disadvantages, role of government, entrepreneur. - answer- Market Economy,
Command Economy, Traditional Economy.
Market Economy - answer- Based on exchange and trade. The people determine what
gets made and how and who. Called free market(capitalism). People and firms act in
their own best interest to answer the Who, What and How questions.
Command Economy - answer- Government makes all the economic decisions. No one
else really has any controle. North Korea, Russia, Cuba
Traditional Economy - answer- The allocation of scarce resources, and nearly all other
economic activity, stems from ritual, habit or custom. Scarce resources.
What is the law of Demand? - answer- When a good's price is lower, consumers will buy
more of it. When the price is higher, consumers will buy less of it.
What affects demand? - answer- The willingness to buy something and a want for it. If
you can afford to buy it or not.
What shifts the demand curve? - answer- Customer Preference, Prices of related
goods, Income, expectations of price range, income, consumer expectations, consumer
tastes and advertising, prices of related goods.
What is Economics? - answer- The study of how peoples need to satisfy their needs
and wants by making choices.
What are the three factors in every Economic scenario - answer- Land, Labor, Capital
What is a trade-off? - answer- All the alternatives that we give up whenever we choose
one course of action over another.
What is a production Possibilites curve/What does it show? - answer- A graph that
shows al alternative ways to use an economy's productive resources. Axes shows
different products. example= shoes and watermelon.
What are the three economic questions. - answer- What goods and services should be
produced? How should these goods and services be produced? Who consumes these
goods and services?
Why are the three economic questions important? - answer- Because economic
resources are limited.
What are the tree types of economies. Be able to explain each, advantages and
disadvantages, role of government, entrepreneur. - answer- Market Economy,
Command Economy, Traditional Economy.
Market Economy - answer- Based on exchange and trade. The people determine what
gets made and how and who. Called free market(capitalism). People and firms act in
their own best interest to answer the Who, What and How questions.
Command Economy - answer- Government makes all the economic decisions. No one
else really has any controle. North Korea, Russia, Cuba
Traditional Economy - answer- The allocation of scarce resources, and nearly all other
economic activity, stems from ritual, habit or custom. Scarce resources.
What is the law of Demand? - answer- When a good's price is lower, consumers will buy
more of it. When the price is higher, consumers will buy less of it.
What affects demand? - answer- The willingness to buy something and a want for it. If
you can afford to buy it or not.
What shifts the demand curve? - answer- Customer Preference, Prices of related
goods, Income, expectations of price range, income, consumer expectations, consumer
tastes and advertising, prices of related goods.
