Simrat Bal Period 4 Chapter 1.1 Vocab 1.

Need- something like air, food, or shelter that is necessary for survival. 2. Want an item that we desire but that is not essential to survival. 3. Economics- the study of how people seek to satisfy their needs and wants by making choices 4. Goods- physical objects such as clothes or shoes 5. Services- actions or activities that one person performs for another. 6. Scarcity- limited quantities of resources to meet unlimited wants 7. Shortage- a situation in which a good or services is unavailable 8. Factors of production- land, labor and capital; the three groups of resources that are used to make all goods and services 9. Land- natural resources that are used to make goods and services. 10. Labor- the effort that people devote to a task for which they are paid. 11. Capital- any human-made resource that is used to create other goods and services. 12. Physical capital- all human-made goods that are used to produce other goods and services; tools and buildings. 13. Human capital- the skills and knowledge gained by a worker through education and experience. 14. Entrepreneur- ambitious leader who combines land, labor, and capital to create and market new goods and services. Chapter 1.1 Homework 1. Goods -physical objects such as shoes and shirts while services are actions or activities that one person performs for another. 2. Scarcity - limited quantity of a resource and it is a good starting point for thinking economically because running out of a good that has a high demand is very fatal. 3. A shortage- when producers will not or cannot offer goods or services at current prices; these can be short-term or long-term. A scarcity however is lack of an item at one time. 4. Land: natural resources that are used to make goods and services. Labor: the effort that people devote to a task for which they are paid. Capital- any human-made resource that is used to create other goods and services 5. Physical capital - an important factor of production because it can save people and companies a great deal of time and money.

6. These individuals take risks to create essential goods and resources, and also create jobs and new industries for the economy.

Chapter 1.2 Vocab

1. Trade-off- an alternative that we sacrifice when we make a decision. 2. Guns or butter- a phrase that refers to the trade-offs that nations face when choosing whiter to produce

more or less military or consumer goods.

3. Opportunity cost- the most desirable alternative give up as the result of a decision 4. Thinking at the margin- deciding whether to do or use one additional unit of some resource.

Chapter 1.2 Questions 1. Studying for a final instead of going to an end-of-the-year party. 2. Because you are trying to maximize the benefits of your decision 3. Economists see guns or butter as two complete opposites. When a country produces more military goods they have less resource to use on consumer goods or vice versa. 4. Thinking at the margin means deciding whether to door use one additional unit of resource.

Chapter 1 Skills for Life 1. A.) The numbers on the horizontal axis represent hours of practice per week. B.) On the vertical axis the numbers represent average points per game. C.) The relationship of the graph shows the player who practiced the most, scored the most. 2. A.) The maximum number of points per game that can be shown is 25 B.) Player B practiced two hours a week. C.) Player E averaged 15 or more a game. 3. I concluded from the graph that the players who practiced the least, scored the least. In comparison, the players who practiced the more tended to score higher.

Chapter 1.3 Vocab

1. Production possibilities curve- a graph that shows alternative ways to use an economys resources. 2. Production possibilities frontier- the line on a production possibilities graph that shows the maximum

possible output.
3. Efficiency- using resources in such a way as to maximize the production of goods and services. 4. Underutilization- using fewer resources than an economy is capable of using. 5. Cost- to an economist, the alternative that is given up because of a decision. 6. Law of increasing costs- law that states that as we shift factors of production from making one good or

service to another, the cost of producing the second item increases.

Chapter 1.3 Questions 1. Underutilization in the production possibilities frontier is not using all factor resources and the output of the goods is less than what is possible. 2. The production possibilities curve shows alternative ways to use an economys productive resource. It can show the categories of goods and services. 3. The production possibilities curve illustrates opportunity cost by showing if you increase production of a product, then you sacrifice another. This decision is called opportunity cost.