| A | B |
|---|
| What word means “having unlimited wants and needs but limited resources”? | scarcity |
| What term is used to describe the value of an alternative that is not chosen? | opportunity cost |
| What are the Four Factors of Production? | land, labor, capital, entrepreneurship |
| The work done by humans is an example of which factor of production? | labor |
| Tools, machines, money and buildings are examples of which factor of production? | capital |
| Which factor of production is being used when an individual decides to start a business? | entrepreneurship |
| What word means “the additional cost of producing one more unit of a good or service”? | marginal cost |
| What method of mass production do factories use to increase productivity? | assembly lines |
| What is it called when production is divided into a set of specific tasks? | division of labor |
| What is it called when worker specializes in a single, specific task in the production process? | specialization |
| What components must be considered when a producer is calculating the total cost of production? | fixed costs + variable costs |
| What type of cost is dependent upon how many units a business decides to produce? | variable costs |
| Which factors can increased the productivity of a business's workforce? | increased training and education |
| What term refers to the level of training and education that workers have? | human capital |
| What type of worker performs tasks that involve manual labor? | blue collar |
| What type of worker is professionally trained to perform tasks in an office or institutional setting? | white collar |
| What type of workers the least productive and earn the lowest wages? | unskilled workers |
| What type of workers earn the highest wages because of their high level of productivity? | skilled workers |
| What is the result of using innovation, technology, specialization, and division of labor? | mass production |
| What type of resources can a business invest in to help it lower its production costs? | human capital, capital goods, technology |
| What is exemplified when a business reaches a point at which producing additional units is less and less profitable? | law of diminishing returns |
| What type of economic system is exemplified by Adam Smith's "Invisible hand" theory? | capitalism |
| Which economic system allows producers and consumers to make their own choices through voluntary exchange? | Market or capitalism |
| In the Free enterprise system, what is the primary factor that motivates individuals' economic choices? | profit |
| Which economic system is characterized by competition between producers and consumers? | Market or Free enterprise system |
| Which economic system is centrally planned by government agencies? | Command (Communism/Socialism) |
| Who owns the property and factors of production in a free market economy? | individuals and businesses |
| In a command/socialist economy, who gets to make the most important economic decisions? | government |
| In the circular flow model of economic activity, who sells products in the product market? | businesses |
| In the circular flow model of economic activity, who sells the factors of production? | individuals/households |
| What is the primary goal of individuals and businesses in a free-market economy? | profit |
| According to the law of demand, what will consumers do when price falls? | buy more |
| According to the law of supply, what will producers do when price rises? | increase production |
| What is the economic effect of price controls? | shortages |
| What will happen to price if there is a shortage of a product? | it will rise |
| What will happen to price if there is a surplus of a product? | it will fall |
| Which economic principle states that consumers will buy more of a good at a lower price than at a higher price? | law of demand |
| Which economic principle states that producers will increase their output of a good or service when the price is higher? | law of supply |
| In a free market economy, who makes the decisions on the most basic economic questions? | individuals and businesses |
| What is the price called at which quantity supplied is equal to the quantity demanded? | market price or equilibrium price |
| What will happen to the market price of a good if personal income of consumers rises? | it will rise |
| What will happen to the market price of a good if a complementary good rises in price? | it will fall |
| What will happen to the price of a good if a substitue for it becomes cheaper? | it will fall |
| What term is used to describe the income that people have left over after they have paid for basic necessities? | disposable income |
| What term is used to describe the lowest wage that employers are legally allowed to pay an employee? | minimum wage |
