ECONOMICS
GUIDED READING
CHAPTER 1:WHAT IS ECONOMICS ?
Section 1 “SCARCITY and the FACTORS of PRODUCTION”
KEY TERMS:
DEFINE:
A. need
B. want
C. goods
D. services ______
E. scarcity ______
F. shortage ______
G. factors of production ______
H. land
I. labor
J. capital
K. entrepreneur ______
L. physical capital ______
M. human capital ______
MAIN IDEAS:
1. What is Economics? ______
2. How is scarcity different from shortages? ______
3. A is something like air, food or shelter that is necessary for survival.
4. A is an item that we desire but that is not essential to
survival.
5. What are physical objects such as shoes and shirts called?
6. are action or activities that one person performs for another.
7. Any resources made by humans and used create other goods and services are called? ______
8. The resources used to make all goods and services are called? ______
9. What are the four (4) factors of production?
A.
B.
C.
D.
10. What special advantage does physical capital (capital goods) offer? ______
11. What is human capital (services)? ______
12. What role do entrepreneurs play in the economy? ______
SECTION 2-“OPPORTUNITY COST” pg 8-12
KEY TERMS;
DEFINE
A. opportunity cost ______
B. thinking at the margin ______
C. guns or butter ______
MAIN IDEAS:
1. What are tradeoffs? ______
2. Give an example of:
A. individuals and trade-offs ______
B. society and trade-offs ______
C. businesses and trade-offs
3. What are opportunity costs? ______
4. What are two advantages of decision-making grid?
A.
B.
5. What does it mean to think “at the margin”? ______
6. On page 11, figure 1.3 “Decision making at the Margin” read the information and then describe at what point the person is paying an added cost with little benefit and tell why. ______
SECTION 3 “PRODUCTION POSSIBILITIES CURVES” pg 12-19
KEY TERMS
DEFINE:
A. efficiency ______
B. underutilization ______
C. cost ______
D. law of increasing cost ______
MAIN IDEAS;
1. What does a production-possibilities show? ______
2. What is the production-possibilities frontier and what is its purpose? ______
3. What does a point inside (or to the left) of the frontier represent? ______
4. What does a point outside (or to the right) of the frontier represent?
______
5. An efficient economy is one that ______
______
6. What three elements give important information on a production-possibility curve?
A.
B.
C.
7. How is efficiency shown on a production-possibility curve? ______
8. How does new technology affect growth on the production-possibilities curve? ______
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