Unit 1 EQs 8/11/10 1) What is TINSTAAFL? There is no such thing as a free lunch.

To get what we like, we usually have to give up another thing that we like. 8/12/10 2) What are the factors of production? The factors of production are capital, entrepreneurship, land, and labor. 8/13/10 3) What causes PPF/PPC to shift/increase to the right? Advancements in technology and new resources cause PPF/PPC to shift/increase to the right. 8/16/10 4) What two ways do households contribute to the circular flow model? Households buy goods and services and sell factors of production (from and to firms). 8/17/10 5) What does investing in human capital mean? It means investing in things like education, on-the-job training, and health. It is the investment in an individual. 8/19/10 6) Countries should specialize and trade based on which advantage? Comparative advantage 8/20/10 7) What are the 3 economic systems and who answers the 3 questions in each of them? - Market economy- people and businesses - Traditional economy- rituals & customs - Command economy- government (central authority)

8/23/10 8) What is the difference between change in demand and change in quantity demanded? While change in quantity demanded is a change in the specific quantity of a good that buyers are willing and able to buy, the change in demand is a shift in the demand curve. Movement to the right shows an increase while movement to the left shows a decrease. 8/24/10 9) What are the determinants that cause change in demand (shifting of demand curve)? The determinants that cause change in demand are consumers taste, consumers income, the number of consumers, expectations, substitutes and complements. 8/25/10 10) What are the determinants that cause change in supply (shifting of supply curve)? The determinants that cause change in supply are the number of sellers, technology, expectations, the cost of inputs, taxes, subsidy, productivity, and government regulation. 8/26/10 11) What are the law of supply and the law of demand? The law of demand is that more is demanded at lower prices and less is demanded at higher prices (inversely related). The law of supply is that more is supplied at higher prices and less is supplied at lower prices (directly related). 8/27/10 12) Price ceiling causes SHORTAGES and price floor causes SURPLUSES. 9/2/10 13) What are the 3 business organizations? The 3 business organizations are sole proprietorships, partnerships, and corporations. 9/3/10 14) Which stock holders vote for the board of directors? The common stockholders vote for the board of directors.

9/7/10 15) What are some examples of fringe benefits? Paid vacation, sick leave, retirement, and insurance