Economic Quiz Chapter 1,2,3,4

What is Economics? - The study of how peoples need to satisfy their needs and wants by making choices. What are the three factors in every Economic scenario - Land, Labor, Capital What is a trade-off? - 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? - 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. - 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? - Because economic resources are limited. What are the tree types of economies. Be able to explain each, advantages and disadvantages, role of government, entrepreneur. - Market Economy, Command Economy, Traditional Economy. Market Economy - 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 - Government makes all the economic decisions. No one else really has any controle. North Korea, Russia, Cuba Traditional Economy - 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? - 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? - The willingness to buy something and a want for it. If you can afford to buy it or not. What shifts the demand curve? - Customer Preference, Prices of related goods, Income, expectations of price range, income, consumer expectations, consumer tastes and advertising, prices of related goods.