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Demystifying Economics
Chapter One: Introduction to Economics
Important Terms:
1. The study of how individuals and society choose to use limited resources in an effort to satisfy unlimited wants.
-Economics
2. Economies found primarily in the rural, non-industrial areas of the world, in which the basic economic questions are answered directly by the people involved.
-Traditional Economies
3. The problem of limited resources and unlimited wants.
-Scarcity
4. The next best alternative use of a resource that is given up in order to use the resource for a specific purpose.
-Opportunity Cost
5. Human-made productive resources, such as factories, tools, and machines, that are necessary for the production of economic goods and services.
-Capital Goods
6. Economies such as that of China.
-Command Economy
7. Economies found in the United States, Canada, Japan, and many of the countries of Western Europe, in which most of the economic questions are answered by a system of free markets.
-Market Economies
8. Economies that have characteristics of both command and market economies.
-Mixed Economies
Review Questions:
1. Define economics. How does economics affect our lives?
-According to the reading economics is defined as the study of how individuals and society choose to use limited resources in an effort to satisfy unlimited wants. Economics affects our business life, personal finances, and even money in general.
2. Why is scarcity the most basic of all economic problems?
-According to the article scarcity is the most basic of all economic problems because they are not enough resources for everyone who needs them.
3. What is meant by the term “opportunity cost”? How does opportunity cost affect both individuals and nations?
-According to the article “opportunity cost” refers to “the highest valued benefit that must be sacrificed as the result of choosing an alternative”.
Chapter One: Introduction to Economics
Important Terms:
1. The study of how individuals and society choose to use limited resources in an effort to satisfy unlimited wants.
-Economics
2. Economies found primarily in the rural, non-industrial areas of the world, in which the basic economic questions are answered directly by the people involved.
-Traditional Economies
3. The problem of limited resources and unlimited wants.
-Scarcity
4. The next best alternative use of a resource that is given up in order to use the resource for a specific purpose.
-Opportunity Cost
5. Human-made productive resources, such as factories, tools, and machines, that are necessary for the production of economic goods and services.
-Capital Goods
6. Economies such as that of China.
-Command Economy
7. Economies found in the United States, Canada, Japan, and many of the countries of Western Europe, in which most of the economic questions are answered by a system of free markets.
-Market Economies
8. Economies that have characteristics of both command and market economies.
-Mixed Economies
Review Questions:
1. Define economics. How does economics affect our lives?
-According to the reading economics is defined as the study of how individuals and society choose to use limited resources in an effort to satisfy unlimited wants. Economics affects our business life, personal finances, and even money in general.
2. Why is scarcity the most basic of all economic problems?
-According to the article scarcity is the most basic of all economic problems because they are not enough resources for everyone who needs them.
3. What is meant by the term “opportunity cost”? How does opportunity cost affect both individuals and nations?
-According to the article “opportunity cost” refers to “the highest valued benefit that must be sacrificed as the result of choosing an alternative”.