Unit I: Economic Fundamentals

Chapters 1-3
1
Unit I
Fundamental Economic Concepts
SSEF1 The student will explain why limited productive resources and unlimited wants result in scarcity,
opportunity costs, and tradeoffs for individuals, businesses, and governments.
a. Define scarcity as a basic condition that exists when unlimited wants exceed limited productive resources.
b. Define and give examples of productive resources (e.g., land (natural), labor (human), capital (capital goods),
entrepreneurship).
c. List a variety of strategies for allocating scarce resources.
d. Define opportunity cost as the next best alternative given up when individuals, businesses, and governments confront scarcity
by making choices.
SSEF The student will give examples of how rational decision ma!ing entails comparing the marginal
benefits and the marginal costs of an action.
a. Illustrate by means of a production possibilities curve the tradeoffs between two options.
b. !xplain that rational decisions occur when the marginal benefits of an action e"ual or exceed the marginal costs.
SSEF" The student will explain how speciali#ation and voluntary exchange between buyers and sellers
increase the satisfaction of both parties.
a. #ive examples of how individuals and businesses speciali$e.
b. !xplain that both parties gain as a result of voluntary, nonfraudulent exchange.
SSEF$ The student will compare and contrast different economic systems and explain how they answer the
three basic economic %uestions of what to produce, how to produce, and for whom to produce.
a. %ompare command, market, and mixed economic systems with regard to private ownership, profit motive, consumer
sovereignty, competition, and government regulation.
b. !valuate how well each type of system answers the three economic "uestions and meets the broad social and economic goals
of freedom, security, e"uity, growth, efficiency, and stability.
SSEF& The student will describe the roles of government in a mar!et economy.
a. !xplain why government provides public goods and services, redistributes income, protects property rights, and resolves
market failures.
b. #ive examples of government regulation and deregulation and their effects on consumers and producers.
SSEF' The student will explain how productivity, economic growth, and future standards of living are
influenced by investment in factories, machinery, new technology, and the health, education, and training of
people.
a. Define productivity as the relationship of inputs to outputs.
b. #ive illustrations of investment in e"uipment and technology and explain their relationship to economic growth.
c. #ive examples of how investment in education can lead to a higher standard of living.
SSE()1 The student will describe how households, businesses, and governments are interdependent and
interact through flows of goods, services, and money.
a. Illustrate by means of a circular flow diagram, the &roduct market' the (esource market' the real flow of goods and services
between and among businesses, households, and government' and the flow of money.
b. !xplain the role of money and how it facilitates exchange.
Unit I: Fundamental Concepts
Chapter Standards
Chapter 1 EF1a,b,d EF2a,b
Chapter 2 EF3a, EF4a,b, EMI1a
Chapter 3 EF3b, EF4a, EF5a,
2
EF6a,b,c
Standards Update Sheet
Name:________________________________Class:_______________Instructor:___________________
+ master - needs !mpro"ement
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Chapter 1.1: Scarcity, Factors of Production, Opportunity Cost, PPC, Chapter 1.1: Scarcity, Factors of Production, Opportunity Cost, PPC,
SSEF1 The student will explain why limited productive resources and unlimited wants result in scarcity, opportunity costs, and
tradeoffs for individuals, businesses, and governments.
a. Define scarcity as a basic condition that exists when unlimited wants exceed limited productive resources.
Essential Question:
)ow do limited productive resources and unlimited wants result in scarcity*
Activating Strateg:
+rayer ,odel -ocabulary
!eaching Strategies:
%lo$e .otes, #raphic /rgani$er
Summari"ing Strateg:
%h. 0.0 1tudy #uide and 2ui$
#ritten $esponse Area:
4
Unit 1: Fundamental Economic Concepts Unit 1: Fundamental Economic Concepts
Chapter 1.1: Scarcity, Factors of Production, Opportunity Chapter 1.1: Scarcity, Factors of Production, Opportunity
Cost, PPC, Cost, PPC,
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5
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During the holiday season of 0334, a children5s toy appeared on #ood ,orning 6merica. 7he toy, produced
by ,attel, had sat on the shelves with very little sales until it appeared on the show. 6fter the toys
appearance, its popularity improved and it became the most sought after product of the holiday season.
8nfortunately, ,attel did not anticipate the doll9s popularity, only producing :;;,;;; units, and were not
able provide the product in a timely manner at the store level (over 0,;;;,;;; were in demand).
%!st the problem that each o& the &ollo'!n( &aced:
6
o )he Consumers *+ou and I,
__________________________________________________________________
o )he -roducer *Mattel,
______________________________________________________________________
o )he #tores *.ab!es / 0s,
____________________________________________________________________
1carcity < is the fundamental problem facing 1carcity < is the fundamental problem facing
========================================================== ==========================================================
_____________________________________________________________________________________________ _____________________________________________________________________________________________
No one can ha"e No one can ha"e
an_______________________________________________________________________ an_______________________________________________________________________
#carc!t appl!es #carc!t appl!es
to_________________________________________________________________________ to_________________________________________________________________________
e1(1 2 mone, ____________________________, ____________________________,etc1 e1(1 2 mone, ____________________________, ____________________________,etc1
2 2 6pplication 2uestion 6pplication 2uestion
%!st three th!n(s that ou &eel are scarce !n our l!&e, 'hat has caused them to become %!st three th!n(s that ou &eel are scarce !n our l!&e, 'hat has caused them to become
scarce3 scarce3
11 11 _____________________________________________________________________________________ _____________________________________________________________________________________
21 21 _____________________________________________________________________________________ _____________________________________________________________________________________
31 31 _____________________________________________________________________________________ _____________________________________________________________________________________
4hat !s Econom!cs3 4hat !s Econom!cs3
Econom!cs 5 the stud o& Econom!cs 5 the stud o& ___________________________ho' !nd!"!duals and (roups see6
to sat!s& the!r
_______________________________________________________________________________________
Needs "s1 4ants
Need 5 a
_______________________________________________________________________________
E(1 Food, ________________________________________________________
4ant 5 not a bas!c re7u!rement __________________________________________, a means o&
e8press!n( a ____________________
E1(1 cheesebur(er,
__________________________________________________________________
9oods and #er"!ces
9ood 5 a _________________________________________________________________________
product
!1e1 5 $utomob!les, :!deo 9ames, Cell -hones, C;<s, )!c6le Me Elmo, etc=
#er"!ce 5 a __________________________________________________________________
that !s per&ormed &or someone else
!1e 5 F!nanc!al $d"!sor, #toc6 .ro6er, Mo"!es, ;ent!st, )eachers, etc11
Factors o& -roduct!on
Factors o& -roduct!on 2 resources re7u!red to
produce____________________________________________
%and
_____________________________________________________________________________
%abor____________________________________________________________________________
_
Cap!tal__________________________________________________________________________
-hs!cal 5 also 6no'n as __________________________________, human made
>
ob?ects that are used to
______________________________________________________________
@uman cap!tal 5 collect!"e amount o&
____________________________________________
and spec!al!Aed _________________________________________________________
Entrepreneursh!p________________________________________________________________
___
9oods and #er"!ces Chart
Item $d"ert!sed 9oodB#er"!ce 4antBNeed Mar6et $ud!ence
;a!l $ss!(nment Cuest!ons
11 4h !s scarc!t not a problem that !s l!m!ted to ?ust the Dha"e2notsE3
__________________________________
__________________________________________________________________________________________
_
21 %!st a (ood and a ser"!ce that ou ha"e purchased !n the past month1
#ood ==================================== 1ervice
============================================
31 4hat !s someth!n( that ou ha"e that m!(ht be cons!dered a 'ant b other soc!et!es3
____________________
E8pla!n 'h
________________________________________________________________________________
41 %ast ear, ou 'ere tr!n( to ma6e a dec!s!on on 'hat 6!nd o& car ou 'anted our
parents to bu ou &or our b!rthda1 +ou had t'o cho!ces: 1, 1FG4, @onda $ccord &or
H2,III, or 2, 2I1I &ull stoc6ed InJn!t! 93> &or H52,III1 4h!ch one o& these 'ould be
cons!dered a 'ant, and 'h!ch one a need and 'h3
______________________________________________________________________________________
______________________________________________________________________________________
51 D@an6E 'or6s t'o ?obs, one !n the morn!n( and one at n!(ht1 $t h!s morn!n( ?ob he sells
&urn!ture at a &urn!ture store1 $t h!s n!(ht ?ob he 'or6s as a computer techn!c!an1
4h!ch one o& h!s ?obs creates a (ood and 'h!ch pro"!des a ser"!ce3
Furn!ture #tore _______________________
Computer )echn!c!an _____________________________
61 M!croso&t oKers all o& the!r emploees the opportun!t to attend the local un!"ers!t &or
a h!(her educat!on, &ree o& char(e1 4hat 'ould be the mot!"at!on &or !n"est!n( !n
human cap!tal3 ________________________
_______________________________________________________________________________________
G
_
>1 4h!ch &actor o& product!on !s represented b each o& the &ollo'!n(3
$n oLce bu!ld!n( _________________________________________________
$n assembl l!ne 'or6er _________________________________________________
$ tree used to ma6e paper_________________________________________________
0nused so!l_________________________________________________
Mprah 4!n&re _________________________________________________
Chapter 1.2: Scarcity, Factors of Production, Opportunity Cost, PPC, Chapter 1.2: Scarcity, Factors of Production, Opportunity Cost, PPC,
SSEF2 The student will give examples of how rational decision maing entails comparing the marginal benefits and the marginal
costs of an action.
b. !efine and give examples of productive resources "e.g., land "natural#, labor "human#, capital "capital goods#,
entrepreneurship#.
c. $ist a variety of strategies for allocating scarce resources.
d. !efine opportunity cost as the next best alternative given up when individuals, businesses, and governments confront scarcity
by maing choices.
Essential Question:
0. >hy does everything you do involve a tradeoff and opportunity cost *
?. >hy is it important to think at the margin*
@. )ow does the market decide to allocate resources*
Activating Strateg:
+rayer ,odel -ocabulary
!eaching Strategies:
%lo$e .otes, #raphic /rgani$er
Summari"ing Strateg:
%h. 0.? 1tudy #uide and 2ui$
1.2: Opportunity Cost 1.2: Opportunity Cost
F
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How People Make Decisions How People Make Decisions
Cho!ce $lternat!"e Cho!ces
4hat ou 'ould ha"e done !&
ou
d!dn<t come to class
11 Com!n( to 11 11
Econom!cs Class
21
31
7radeoff< 7radeoff<alternatives that we ============================== whenever we choose
===================================================================================
>e always ======================================================== to get something >e always ======================================================== to get something
else else
1I
D)here !s no D)here !s no
___________________________________________________________________E ___________________________________________________________________E
Ind!"!duals, households and soc!et all &ace tradeoKs Ind!"!duals, households and soc!et all &ace tradeoKs
Mpportun!t Cost 5 used b econom!sts to __________________________________________N "alue o&
the most _________________________________________________________
.ext best alternative ===================================================
()ighest ================================== forgone)
Individuals and 7rade/ffs
=======================================================================================
=======================================================================================
Ausinesses and 7radeoffs
=======================================================================================
1ociety and 7radeoffs
=======================================================================================

$lternat!"es Cr!ter!a
Immed!ate %on(2)erm Enterta!n!n( Immed!ate Necessar &or
#at!s&act!on .eneJts
F!nanc!al
.eneJts %on(2term
success
#leep
Econom!cs
)h!n6!n( at the Mar(!n
Mar(!n 2 an ed(e and the ____________________________________________________N a
________________
)h!n6!n( at the mar(!n 5 analA!n( the costs and beneJts o&
___________________________________________
____________________________________________________________________________________________
-roduct!on -oss!b!l!t!es Model 5 used to (raph _________________________________________N
sho's alternat!"e
__________________________________________________________________________________
Chapter 1.3: Scarcity, Factors of Production, Opportunity Cost, PPC, Chapter 1.3: Scarcity, Factors of Production, Opportunity Cost, PPC,
SSEF2 The student will give examples of how rational decision maing entails comparing the marginal benefits and the marginal costs
of an action.
b. !efine and give examples of productive resources "e.g., land "natural#, labor "human#, capital "capital goods#,
entrepreneurship#.
c. $ist a variety of strategies for allocating scarce resources.
d. !efine opportunity cost as the next best alternative given up when individuals, businesses, and governments confront scarcity
by maing choices.
Essential Question:
0. >hat does the &&% show in regards to tradeoffs and opportunity costs of an individual, business or society*
Activating Strateg:
+rayer ,odel -ocabulary
!eaching Strategies:
%lo$e .otes, #raphic /rgani$er
Summari"ing Strateg:
11
%h. 0.0 1tudy #uide and 2ui$
1.3: Production Possibilities Curve
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12
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-roduct!on -oss!b!l!t!es Cur"es
&roduction &ossibilities +rontier ,odel < shows combinations
of===================================================================================
o 0sed to "!suall
represent_______________________________________________________________
&roduction &ossibilities %urve (&&%) < shows combinations of
======================================================================================
!fficiency < using resources in such a way as to
=====================================================
o -o!nts ____________________________
8nderutili$ation (Inefficiency) < using fewer resources than an
========================================
o -o!nt ________ *IneLc!ent use o& resources,
#rowth (future technology) < the change in ability to ================================, reflects a
________________________________________________________
.ew ========================================== (usually as a result of new technology)
13
9ood $ 9ood $ 9ood . 9ood .
I I 12 12
1 1 1I 1I
2 2 G G
3 3 6 6
4 4 4 4
5 5 2 2
6 6 I I
;a!l $ss!(nment Cuest!ons Ch1 1 #ec1 2 -a(e G 5 11
11 4r!te one e8ample, o& our o'n, o& ho' !nd!"!duals, bus!nesses and soc!et!es ma6e
tradeoKs1
Individuals
===========================================================================
Ausinesses
===========================================================================
1ociety
==============================================================================
21 4h !s opportun!t cost not the cost o& e"er a"a!lable alternat!"e o& a dec!s!on3
__________________________
___________________________________________________________________________________________
31 4hat 'ere Oaren<s t'o alternat!"es !n J(ure 1121
___________________________________________________
41 4hat d!d Oaren ult!matel (!"e up b sleep!n( lateB'a6!n( up earl to stud &or the test3
___________________
51 In J(ure 113, at 'hat po!nt does the added beneJt o& stud t!me not !ncrease as much3
____________________
61 4hat does !t sa Oaren should th!n6 about 'hen ma6!n( a dec!s!on at the mar(!n3
________________________
___________________________________________________________________________________________
>1 @o' does compar!n( the cost and beneJt at the mar(!n help ma6e us a better dec!s!on
ma6er3
___________________________________________________________________________________________
14
G1 #uppose that ou can sa"e H5I b bu!n( our car !n a d!Kerent c!t1 I& the tr!p
re7u!res onl H1I dollars !n (asol!ne, !s the tr!p 'orth'h!le3 4h or 'h not3
______________________________________________
_______________________________________________________________________________________
F1 ;eterm!ne an opportun!t cost &or each o& the &ollo'!n(:
a, Eat!n( a p!AAa
______________________________________________________________________________
b, 9o!n( to see a mo"!e a&ter
school______________________________________________________________
c, 4or6!n( an a&ter school
?ob___________________________________________________________________
d, /ead!n( our econom!cs boo6 unt!l ou (o to sleep ton!(ht
_________________________________________
/e"!e' 2 9uns or .utter --F $ppl!cat!on Cuest!ons
11 @o' man (uns can be produced 'hen no butter !s produced3 ____________
21 )he opportun!t cost o& !ncreas!n( the product!on o& .utter &rom I to 3I un!ts !s ________
un!ts o& 9uns1
31 4hat 'ould !t sa about th!s soc!et !& the product!on dec!s!on 'as to produce at the *45,
2I, po!ntN assum!n( that !t ta6es 3I un!ts o& butter to pro"!de bas!c &oodstuKs to soc!et
and 4I un!ts o& 9uns to protect the!r soc!et3
_____________________________________________________________________________________
$ns'er the &ollo'!n( 7uest!ons based on the model abo"e:
11 4hat do the po!nts alon( the cur"e represent3
____________________________________________________
21 4hat does the po!nt at letter a represent3
________________________________________________________
31 4h !s letter b currentl unatta!nableN 'hat could allo' th!s soc!et to reach letter b3
_____________________
15
Study Guide Study Guide
Chapter 1 !hat is "cono#ics$
Section 1 Scarcity and the Science of "cono#ics
11 ____________________________ !s the &undamental problem o& econom!cs, that people ha"e
unl!m!ted 'ants but l!m!ted resources to sat!s& those 'ants1
21 4h can 'e ar(ue that scarc!t aKects both the r!ch and the poor3
___________________________________________________________________________________________
31 Econom!cs !s the
________________________________________________________________________________
41 E8pla!n the d!Kerence bet'een a need and a 'ant
___________________________________________________________________________________________
51 E8pla!n the d!Kerence bet'een a (ood and a ser"!ce and pro"!de an e8ample o&
each______________________________________________________________________________________
__
61 )he Factors o& -roduct!on are resources re7u!red to
___________________________________________________
>1 -ro"!de an e8ample o& each o& the Factors o& -roduct!on:
a1 %and
___________________________________________________________________________________
b1 %abor
__________________________________________________________________________________
c1 Cap!tal
_________________________________________________________________________________
d1 Entrepreneur_______________________________________________________________________
___
G1 E8pla!n the d!Kerence bet'een phs!cal and human cap!tal
___________________________________________________________________________________________
Section 2 Opportunity Cost
F1 4h do dec!s!ons !n"ol"e tradeoKs3
________________________________________________________________
1I1___________________________________ cost !s the most des!rable alternat!"e (!"en up as the
result o& a dec!s!on1
111E8pla!n 'h Dthere !s no such th!n( as a &ree lunchE
_________________________________________
___________________________________________________________________________________________
121@o' !s th!n6!n( at the mar(!n help&ul3
______________________________________________________________
131$pple<s dec!s!on to produce less o& the !-od , but more o& the !-hone represents a
_____________________ tradeoK1
16
141North Oorea<s dec!s!on to ne(lect the health o& the!r c!t!Aens to bu!ld up the!r m!l!tar !s an
e8ample o& a ___________________________ tradeoK1
151)he dec!s!on to come to econom!cs class or to sleep !n !s a _____________________________
tradeoK1
161Mne method o& compar!n( the cost o& an act!on to the beneJt rece!"ed !s a
_________________________________
1>14hat does the product!on poss!b!l!t!es cur"e sho'3
__________________________________________________
1G19!"e an e8ample o& ho' the product!on poss!b!l!t!es &ront!er can (ro' *sh!&t to the r!(ht,
1F19!"e an e8ample o& ho' o& underut!l!Aat!on o& resources m!(ht occur
2I1Illustrate b means o& a product!on poss!b!l!t!es cur"e the trade2oKs bet'een t'o
opt!ons1
a1 %abel our cur"e --F
-oss!b!l!
t
9uns .utter
a I 15
b 1 14
c 2 12
d 3 F
e 4 5
& 5 I
a, 4h !s the --F cur"ed 'hen charted on a (raph3
b, @o' man (uns can ou produce !& ou produce no butter3 _________________
c, @o' much butter do ou produce 'hen ou produce no (uns3 _________________
d, @o' man (uns do ou (!"e up !& ou produce 12 butter3 ________________
e, @o' much butter do ou (!"e up !& ou produce 4 (uns3 ________________
&, $n po!nt !ns!de the --F l!ne !nd!cates the ______________________________ o& resources,
'hereas an po!nt outs!de the l!ne !nd!cates _________________________ !n the product!on
poss!b!l!t!es &ront!er1
1>
I
15
6
.utter
9uns
E*% +F C,A-!E$ 1
Chapter 2: "cono#ic Syste#s Chapter 2: "cono#ic Syste#s
SSEF4 The student will copare and contrast different econoic systes and e!plain how they answer the three
"asic econoic #uestions of what to produce, how to produce, and for who to produce.
a. %ompare command, maret, and mixed economic systems with regard to private ownership, profit motive, consumer
sovereignty, competition, and government regulation.
b. Evaluate how well each type of system answers the three economic &uestions and meets the broad social and economic goals
of freedom, security, e&uity, growth, efficiency, and stability.
Essential Question:
0. )ow do the four economic systems answer the four basic !conomic "uestions*
?. >hat comparisons can be made about the four economic systems*
Activating Strateg:
>.(. 1peculate how each economic system would regulate their economy.
!eaching Strategies:
%lo$e .otes, #raphic /rgani$er
Summari"ing Strateg:
%h. ?.0 Daily 6ssignment 2uestions and 1tudy #uide.
#ritten $esponse Area:
1G
Chapter . / Economic Sstems
Section 1 / Ans)ering the Four Economic Questions
!conomic system < is the method used by society to
================================================
)he Four Oe Econom!c Cuest!ons are
o 4hat and @o'
Much____________________________________________________________________
o 4ho ____________________________________________________________________________
o @o' ____________________________________________________________________________
o For 4hom _______________________________________________________________________
Four )pes o& econom!c sstems
0. 7raditional !conomy < relies on ==================================================
to decide the three economic "uestions.
?. ,arket !conomy < economic decisions are made by
==================================== and are based on =========================
@. %ommand !conomies < in a centrally planned economy the
==================================== alone decides how to answer the three economic
"uestions.
:. ,ixed !conomy < most modern economies are mixed economies, ========================
based economic systems in which the government ====================================
0s!n( the Chart .elo', descr!be each o& the Econom!c 9oals and #oc!etal :alues1 )hen pro"!de a
real2l!&e e8ample o& each1
Econom!c 9oal and
#oc!etal :alue
#ummar E8ample
0. !conomic
!fficiency
?. !conomic +reedom
@. !conomic 1ecurity
and &redictability
:. !conomic !"uity
B. !conomic #rowth
and Innovation
4. /ther #oals
1F
/e"!e' Econom!c 9oals
#!tuat!on Econom!c 9oal
11 %ast 'ee6 I '!ll!n(l enrolled !n colle(e courses
at Coastal1 I am so happ that I ma6e m
dec!s!ons about m &uture1
21 M uncle lost h!s ?ob, but than6&ull he !s able
to rece!"e unemploment chec6s1
31 4al2Mart recentl up(raded all o& the!r
re(!sters to touch screen mon!tors1
41 9eneral Motors replaced all o& the!r human
'or6ers '!th robots !n order to !ncrease
product!"!t1
51 $s a result o& the !nternet and technolo(, our
econom has e8per!enced s!(n!Jcant
e8pans!on o"er the past 3I ears1
61 I can al'as e8pect -ubl!8 to ha"e the &ood I
l!6eP
>1 @ope&ull !n the &uture 'e '!ll ha"e &ull
emploment1
C. >ith every degreeDskill I earn, I improve my ability to
make money
;a!l $ss!(nment Chapter 2 #ect!on 1 5 p(s1 2622>
11 @o' does a trad!t!onal econom ans'er the three econom!c 7uest!ons3
21 ;escr!be trad!t!onal econom!es and the!r commun!t!es1
31 4hat !s a d!sad"anta(e to a trad!t!onal econom3
41 @o' are the three econom!c 7uest!ons ans'ered !n a mar6et econom3
51 4hat are other names &or mar6et econom!es3
2I
61 @o' are the three econom!c 7uest!ons ans'ered !n a command econom3
>1 4h are the re&erred to as command econom!es3
G1 4h are most modern econom!es re&erred to as m!8ed econom!es3
Chapter 2: "cono#ic Syste#s Chapter 2: "cono#ic Syste#s
SSE()1 The student will describe how households, businesses, and governments are interdependent and
interact through flows of goods, services, and money.
c. Illustrate by means of a circular flow diagram, the &roduct market' the (esource market' the real flow of goods and services
between and among businesses, households, and government' and the flow of money.
Essential Question:
0. )ow can you track the flow of goods and services using the %ircular +low ,odel*
Activating Strateg:
>almart activity
!eaching Strategies:
%lo$e .otes, #raphic /rgani$er
Summari"ing Strateg:
%h. ?.? Daily 6ssignment 2uestions and 1tudy #uide.
Section . / !he Free 0ar(et
Ima(!ne that ou are 'al6!n( !nto 4almart1 %!st 3 !tems that ou could purchase and the
departments that ou 'ould Jnd them !n1
Item ;epartment
Mar6et 5 buers and sellers
____________________________________________________________________
Mar6et Econom 5 econom!c dec!s!ons,
__________________________________________________________ are made b
__________________________ and _________________________________based on e8chan(e o&
_______________________________________________________
Cap!tal!sm *&ree enterpr!se, 5 Ind!"!duals and bus!nesses o'n the
______________________________________ and can proJt on them
#pec!al!Aat!on 5 the separat!on o& _________________________________________________N people
&ocus on a ______________________________________________________
;!"!s!on o& %abor 5 'or6ers per&orm ____________________________________________________ !n
order to ____________________________________________________
@ousehold 5 ________________________________________________________________ l!"!n( !n a
res!dence
o Consumers 2 use the _____________________________________________ to sat!s& 'ants
and needs
21
F!rm 5 _____________________________________________ that uses resources to
___________________________________________, 'h!ch !t then sells
o #uppl!ers 5 trans&orm D________________________E *F1M1-1, !nto
D__________________________E *consumer products,
-roduct Mar6ets 5 _______________________________________________ !nteractN producers sell
the!r ________________________________________________________
o @ouseholds are ____________________________________ o& (oods and ser"!ces
o F!rms are _____________________________________ o& (oods and ser"!ces
Factor Mar6ets 5 the mar6ets 'here product!"e resources *F1M1-, are bou(ht and sold
o %abor 2 F!rms *bus!nesses, _________________________________________________________
o %and 2 _________________________________________________________ land
o Cap!tal 2 0se mone &rom ____________________________________________
*_______________________, !n"estment, etc, to purchase
_____________________________________
C!rcular Flo' Model 2 sho's the Qo' o& _________________________ and
____________________________ &rom and to _________________________and
_________________________
$ppl!cat!on Cuest!on
11 In the &actor mar6et, 'hat do bus!nesses pro"!de households3
__________________________________
21 )he Qo' o& (oods and ser"!ces !n the product mar6et !s represented b 'h!ch Jrm
and products on the model belo'3 ______________________________________________
31 4hen ou appl &or a ?ob at the local #tarbuc6s 'h!ch mar6et are ou !n3
_________________________
41 4h!ch color arro's represent the Qo' o& moneN 'hat color arro's represent the
Qo' o& !nputs and outputs1 __________________________________
Compet!t!on $rt!cle
22
11 ;o ou a(ree '!th :!ncent %ombard!<s assert!on that people are born '!th the des!re to
compete 'h or 'h not3
________________________________________________________________________________
________________________________________________________________________________________
21 4hat areas do ou see compet!t!on !n the econom o& the 0n!ted #tates 3
___________________________
________________________________________________________________________________________
31 @o' !s compet!t!on beneJc!al to our economBsoc!et3
___________________________________________
41 @o' !s !t harm&ul to our economBsoc!et3
_____________________________________________________
Compet!t!on 5 eKorts amon( _________________________________________ to attract
consumers at "ar!ous pr!ces
o $t the heart o& ________________________________________
Incent!"e 5 an e8pectat!on that
__________________________________________________________________ *pos!t!"e and ne(at!"e,
.us!nesses respond to __________________________________
Consumers respond to __________________________________
Chapter 2: "cono#ic Syste#s Chapter 2: "cono#ic Syste#s
SSEF4 The student will copare and contrast different econoic systes and e!plain how they answer the three
"asic econoic #uestions of what to produce, how to produce, and for who to produce.
a. Copare coand, ar$et, and i!ed econoic systes with re%ard to pri&ate ownership, profit oti&e, consuer
so&erei%nty, copetition, and %o&ernent re%ulation.
". E&aluate how well each type of syste answers the three econoic #uestions and eets the "road social and econoic
%oals of freedo, security, e#uity, %rowth, efficiency, and sta"ility.
Essential Question:
0. )ow are the four basic economic "uestions answered according to a %entrally &lanned !conomy*
Activating Strateg:
.orth Eorea -ideo and >ritten (esponse. httpFDDwww.youtube.comDwatch*featureGplayer=detailpageHvGw,0sEw>=/gk
!eaching Strategies:
%lo$e .otes, #raphic /rgani$er
Summari"ing Strateg:
%h. ?.@ Daily 6ssignment 2uestions and 1tudy #uide.
Section 3 / Centrall -lanned Economies
Command 5 ____________________________________________________________ the Factors o&
-roduct!on
Centrall -lanned Econom 5 central (o"ernment ans'ers the
______________________________________________N ________________ to produce,
________________to produce, and ________________to produce
o Mppose _________________________, &ree mar6et pr!c!n(, econom!c ___________________
Socialism and Communism
Earl ,arx < #erman =========================================== that studied
====================================== in !urope
23
o %ommunist ,anifesto < written by ,arx and
========================================== became basis for modernday
==========================================
o 7hought capitalism would fail because it
==========================================================
o Aelieved in a ===========================system, where all share in
=====================================
o 1ocialism < distribution of ========================================== e"ually amongst
society
o %ommunism < political and economic system with
============================================
o 6uthoritarian #overnment < exact =========================================from their
citi$ens' do not allow ==========================================
Chapter . Section 3 / %ail Assignment Questions 1!he Former Soviet Union23 pgs4 35-36
,o) did the Soviet arise7
14 #here did Soviet planners allocate the 8actors o8 production7
.4 ,o) did the Soviet Union control agriculture7
34 #hat three industries did Soviet -lanners 8avor7
94 ,o) did the Soviet Union vie) entrepreneurial endeavors7
:4 #hat )as the ;uote used ' Soviet consumers as a <o(e7
54 #h )ere Soviet Consumers= le8t unsatis&ed7
-age 3> / $ussia in Crisis
?4 ,o) did man $ussians initiall respond to the Communist collapse7
64 #hat happened over the ne@t decade7
>4 ,o) did $ussia deal )ith corruption7
1A4#hat )ere some characteristics o8 $ussia=s &nancial pro'lems7
24
114#hat evidence can 'e seen that success is in sight7
Chapter . Section . / %ail Assignment: Economic -ro&le Adam Smith pgs4 33
14 #hat )as Adam Smith=s ethnic and pro8essional 'ac(ground7
.4 #hat )as the name o8 the 'oo( that he pu'lishedB )hen )as it pu'lished7
34 #hat did Smith identi8 in the 'oo(7
94 #hat did he assert a'out speciali"ation and division o8 la'or7
:4 #hat did he 'elieve a'out the role o8 government in the econom7
54 %e&ne the French term Caisse" FaireB )h did Smith 'elieve in Caisse"-Faire economics7
?4 #hat is meant ' his metaphor o8 the Invisi'le ,and7
64 ,o) do 'oth consumers and 'usinesses 'ene&t 8rom this philosoph7
Chapter 2: "cono#ic Syste#s Chapter 2: "cono#ic Syste#s
SSEF4 The student will copare and contrast different econoic systes and e!plain how they answer the three
"asic econoic #uestions of what to produce, how to produce, and for who to produce.
c. Copare coand, ar$et, and i!ed econoic systes with re%ard to pri&ate ownership, profit oti&e, consuer
so&erei%nty, copetition, and %o&ernent re%ulation.
d. E&aluate how well each type of syste answers the three econoic #uestions and eets the "road social and econoic
%oals of freedo, security, e#uity, %rowth, efficiency, and sta"ility.
Essential Question:
?. )ow are the four basic economic "uestions answered according to a %entrally &lanned !conomy*
Activating Strateg:
,odern 6merica videoF @@F?; httpFDDwww.youtube.comDwatch*featureGplayer=detailpageHvGh!7$1IDbg6JtG?;;@
!eaching Strategies:
%lo$e .otes, #raphic /rgani$er
Summari"ing Strateg:
%h. ?.: Daily 6ssignment 2uestions and 1tudy #uide.
Section 9 / 0odern Economies
Free Enterpr!se 5 __________________________!n the mar6etplace !s allo'ed to Qour!sh '!th
_______________________________________________________________________________
Mod!Jed Free Enterpr!se *m!8ed econom, 5 bus!nesses are &ree to compete '!th
_________________________
___________________________________________________________________________________________
%a!sseA Fa!re !n a Modern Econom
%a!sseA Fa!re 5 no
_____________________________________________________________________________
@!stor has sho'n that _______________________________________________________ !s
necessar !n the economN some needs are
______________________________________________________________________
o Nat!onal de&ense, __________________________, ___________________________________, etc
25
o 9o"ernment acts a
____________________________________________________________________ o& the econom
9o"ernment /e"enue
)a8es &rom both ________________________and __________________________
o Federal ________________________, state_________________________, soc!al secur!t,
___________________________BMed!ca!d, ______________________________________, etc1
9o"ernment !n the Factor Mar6et
#overnment purchases =========================, ==========================, and
================================ from households
o 81 government pays ============= employees, =============== billion for labor
9o"ernment !n the Factor Mar6et
#overnment purchases =========================, ==========================, from
================================
o Auildings, ===========================, telephones, ===========================, etc.
E*% +F C,A-!E$ .
Chapter 3: !he American Free Enterprise Sstem3 341: Free Enterprise
SSEF' The student will e!plain how speciali(ation and &oluntary e!chan%e "etween "uyers and sellers increase
the satisfaction of "oth parties.
a. 'ive examples of how individuals and businesses speciali(e.
b. Explain that both parties gain as a result of voluntary, non)fraudulent exchange.
SSEF) The student will descri"e the roles of %o&ernent in a ar$et econoy.
b.'ive examples of government regulation and deregulation and their effects on consumers and producers.
Essential Question:
0. >hat is the origin of the 6merican +ree !nterprise 1ystem*
?. )ow does the 6merican +ree !nterprise 1ystem work effectively*
Activating Strateg:
,odern 6merica videoF @@F?; httpFDDwww.youtube.comDwatch*featureGplayer=detailpageHvGh!7$1IDbg6JtG?;;@
!eaching Strategies:
%lo$e .otes and 6ctivities
Summari"ing Strateg:
%h. @.0 Daily 6ssignment 2uestions and 1tudy #uide.
Chapter 3: !he American Free Enterprise Sstem
SSEF3'3 SSEF9a3 SSEF:a3 SSEF5a3'3c
%e&nition
%escri'e
%e&nition
%escri'e
%e&nition
%escri'e
I thin( %ra) I thin( %ra) I thin( %ra)
26
%e&nition
%escri'e
%e&nition
%escri'e
%e&nition
%escri'e
I thin( %ra) I thin( %ra) I thin( %ra)
%e&nition
%escri'e
%e&nition
%escri'e
%e&nition
%escri'e
I thin( %ra) I thin( %ra) I thin( %ra)
#ritten $esponse Area:
341: Free Enterprise
A tradition o8 Free Enterprise
+ver 16 million unincorporated 'usinesses in America4
America3 1the land o8 opportunit32 a place )here anone 8rom an 'ac(ground could achieve
success through hard )or(
#h has America 'een so success8ul7
+pen land3 natural resources and uninterrupted Do) o8 immigrants4
Free Enterprise / social and political commitment to giving people the 8reedom and De@i'ilit to
tr out their 'usiness ideas and compete in the mar(etplace4 -ursuit o8 ,appness :
http:EE)))4outu'e4comE)atch7vFG@cH!tlI)eQ
Constitutional -rotections:
GGGGGGGGG GGG GGGGGGGGGGGGGG / guarantees certain individual 8reedoms4 I4E4: 8reedom o8 speech3
religion
GGGGGGGGGGGGGGGGGG GGGGGGGGGGGGGGGG / protected under the :
th
amendment% no person shall be deprived
of life, liberty, or property &ithout due process of la&% nor shall private property be ta'en for
public use &ithout (ust co#pensation
!a@ation
Article I / gives Congress the po)er to lev ta@es3 Sections . and > ta@es apportioned according
to population so that everone )ill pa the same amount4
GGGGGGGGGGGGGGGGGGG GGGGGGGGGGGGGGGGGGG J1>13K / gave Congress the right to set ta@es 'ased on Income
Income !a@ $ates: http:EE)))4'an(rate4comE&nanceEta@esE.A11-ta@-'rac(et-rates4asp@
Article I3 Section 1A / individuals or 'usiness cannot use political process to get e@cused 8rom
their contracts3 no la) can 'e passed that )ould change the terms o8 someone=s 'usiness
agreement4
Lasic -rinciples o8 Free Enterprise
2>
GGGGGGGGGGGGGGGG GGGGGGGGGGGGGGGGGGG / the 8orce that encourages people and organi"ations to improve
their material )ell-'eing
It re)ards innovation3 and improves productivit
GGGGGGGGGGGGGGGGGG GGGGGGGGGGGGGGGGGGGGG / the concept that everone can compete in the mar(etplace
Economic $ights /
Cegal e;ualit / everone has the same legal rights3 it allo)s everone to compete in the
economic mar(etplace
GGGGGGGGGGGGGGGG GGGGGGGGGGGGGGG GGGGGGGGGGGGG / people have the right and privilege to control their
possessions as the )ish4
Free contract / allo)s people to decide )hat agreements the )ant to enter into4
GGGGGGGGGGGGGGGGGGGGGG GGGGGGGGGGGG / allo)s people to decide )hat and )hen the )ant to 'u and
sell4
GGGGGGGGGGGGGGGGGGGG / rivalr among sellers to attract customers )hile lo)ering costs4 -rovides
consumers )ith the choice o8 a larger variet o8 goods4
$ole o8 the Consumer / ma(e their desires (no)n through economic dealings )ith
producers Jsill 'ands3 vans3 i-podsK
$ole o8 the Iovernment
In8ormation and Free Enterprise
-u'lic %isclosure Ca)s- re;uire companies to give consumers important in8ormation a'out their
products
Credit card disclosure la)s http:BB'''1outube1comB'atch3"R6SFOu5F2T2o
-rotecting ,ealth3 Sa8et and #ell Leing / "oning la)s3 environmental protection3 8ood3
3medicineM
+n page :: list the 0a<or Federal $egulator Agencies and their role in the American Free
Enterprise Sstem
0a<or Federal $egulator Agencies:
Agenc and %ate Created $ole
2G
34.: -romoting Iro)th and Sta'ilit
SSEF' The student will e!plain how speciali(ation and &oluntary e!chan%e "etween "uyers and sellers increase
the satisfaction of "oth parties.
a. 'ive examples of how individuals and businesses speciali(e.
b. Explain that both parties gain as a result of voluntary, non)fraudulent exchange.
SSEF) The student will descri"e the roles of %o&ernent in a ar$et econoy.
a. 'ive examples of government regulation and deregulation and their effects on consumers and producers.
Essential Question:
0. >hat are three ways of promoting growth and stability*
?. >hat does the business cycle represent*
Activating Strateg:
+raye r-ocab
!eaching Strategies:
%lo$e .otes and 6ctivities
Summari"ing Strateg:
%h. @.? Daily 6ssignment 2uestions and 1tudy #uide.
34.: -romoting Iro)th and Sta'ilit
2F
%e&nition
%escri'e
%e&nition
%escri'e
%e&nition
%escri'e
I thin( %ra) I thin( %ra) I thin( %ra)
%e&nition
%escri'e
%e&nition
%escri'e
%e&nition
%escri'e
I thin( %ra) I thin( %ra) I thin( %ra)
!rac(ing Lusiness Ccles
GGGGGGGGGGGGGGGGGGGGGG / the stud o8 the economic 'ehavior and decision ma(ing o8 small units3
such as individuals3 8amilies and 'usinesses JindividualsK
GGGGGGGGGGGGGGGGGGGGG / the stud o8 the 'ehavior and the decision ma(ing o8 entire economies4
J!he nationK
American Free Enterprise / Iovernment plas a role in attempting to prevent )ild s)ings in
economic 'ehavior4
Lusiness Ccle / a period o8 macroeconomic e@pansion ' a period o8 contraction
-romoting Economic Strength
1. *igh Employment + unemployment rate of $,'-
. .rowth + higher standard of living for each generation
". Economic Citi#enship + )nfluence the system by voting
!echnolog and -roductivit Jp4:>K
America has a high standard o8 living in comparison to the ma<orit o8 the rest o8 the )orld
I%-Ecapita statistics: http:EEen4)i(ipedia4orgE)i(iECistGo8GcountriesG'GI%-GJ---KGperGcapita
GGGGGGGGGGGGG GGGGGGGGGGGGGGGG / purpose8ul activit and commitment to value
GGGGGGGGGGGGGGGGGGGG / process used to produce a good or service
Innovations help us create more 8or less4
!ime 0aga"ine .A1A Inventions http:EE)))4outu'e4comE)atch7vF!$(dm-
hiA9N8eatureFrelated3
Iovernments $oll:
-rovides Incentive 8or innovation
0orrill Acts o8 165. and 16>A / land-grant mone to pursue the stud o8 agriculture4 I4E4 0I!
and !e@as AN0 Universit
*ASA /
US -atents / gives the inventor the e@clusive right to produce and sell 8or .A ears
Copright / e@clusive rights to pu'lish and sell creative )or(s
$N% / $esearch and %evelopment
3I
343: -roviding -u'lic Ioods and 349 -roviding a Sa8et *et
SSEF) The student will descri"e the roles of %o&ernent in a ar$et econoy.
a. E!plain why %o&ernent pro&ides pu"lic %oods and ser&ices, redistri"utes incoe, protects property ri%hts, and resol&es
ar$et failures.
". *i&e e!aples of %o&ernent re%ulation and dere%ulation and their effects on consuers and producers.
Essential Question:
14 ,o) does the government provide 8or mar(et 8ailures7
?. ,o) does the government help provide 8or a proper standard o8 living7
Activating Strateg:
+raye r-ocab
!eaching Strategies:
%lo$e .otes and 6ctivities
Summari"ing Strateg:
%h. @.@,: Daily 6ssignment 2uestions and 1tudy #uide.
343: -roviding -u'lic Ioods
31
%e&nition
%escri'e
%e&nition
%escri'e
%e&nition
%escri'e
I thin(
%ra)
I thin(
%ra)
I thin( %ra)
%e&nition
%escri'e
%e&nition
%escri'e
%e&nition
%escri'e
I thin(
%ra)
I thin(
%ra)
I thin( %ra)
%e&nition
%escri'e
%e&nition
%escri'e
%e&nition
%escri'e
I thin(
%ra)
I thin(
%ra)
I thin( %ra)
GGGGGGGGGGGGG GGGGGGGGGGGGG / a shared good or service 8or )hich it )ould 'e ineOcient or impractical
to ma(e consumers pa individuall and to e@clude non-paers4
I4E4 Cleaning 0t4 $ushmore3 launching a space shuttle3 Interstate high)a3 -ar(s
#h )ould each o8 the a'ove 'e considered a pu'lic good7
GGGGGGGGGGGGGGGGGG GGGGG GGGGGGGGGGG / the 'ene&t must out)eigh the cost )hen deciding to move
8or)ard )ith a pu'lic good
1. The benefit to each individual is less than the cost that each would have to pay if it were provided privately.
. The total benefits to society are greater than the total cost.
Cist 3 -u'lic Ioods in Ilnn Count that prove to 'ene&t societ more than it costs4 E@plain )h4
-u'lic Iood E@plain )h it 'ene&ts societ
more than it costs societ
GGGGGGGGGGGGGG GGGGGGGGGGGGGGG / a situation in )hich the mar(et does not distri'ute resources
eOcientl4
32
I4E4: $oads / i8 a compan 'uilt it the )ould have to charge a 8ee 8or its use in order to ma(e a
pro&t4 In addition3 i8 the population )as sparse3 then the compan )ould have no incentive to
produce it due to lac( o8 pro&t4
GGGGGGGGGGG GGGGGGGGGGG / someone )ho )ould not choose to pa 8or a certain good or service3 'ut
)ould get the 'ene&ts o8 it an)a i8 it )ere provided as a pu'lic good4 I4E4 Fire -rotection3
Arm helmets3 $oads4
#e are all 8ree riders4 I8 ou use a road that is out o8 state3 then ou 'ecome a 8ree-rider4 Pou
paid nothing to)ards the road3 'ut still use it4
GGGGGGGGGGGGGGGGGG / an economic side eQect o8 a good or service that generates 'ene&ts or costs to
someone other than the person deciding ho) much to produce or consume
////////////// Externality + an old house is purchased and fixed up + the neighborhood property value
increases due to this. The neighbors benefit without extending any energy towards the improvement of the old
house.
///////////// Externality + chemical waste is dumped in the river by a local pulp mill + the community is in
harms way of toxic waste. The community did not as! for the pollution, but is on the negative receiving end of the
pulp mill.
Cist !)o -ositive and !)o *egative e@ternalities in the communit and e@plain )h the are
positive and negative4
- -ositive E@ternalit * *egative E@ternalit
349 -roviding a Sa8et *et
%e&nition %escri'e %e&nition %escri'e
I thin( %ra) I thin( %ra)
33
%e&nition
%escri'e
%e&nition
%escri'e
I thin( %ra) I thin( %ra)
Fill in the appropriate in8ormation according to the po)erpoint4
Persons
in Family
48 Contiguous
States and D.C.
Alaska Hawaii
1
2
3
4
5
6
7
8
For each additional
person, add

-rograms in place:
GGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGG J!A*FK / program aims to move people 8rom )el8are
dependence to the )or( 8orce4
Federal mone issued to the state and the state runs their o)n )el8are program4
GGGGGGGGGGGGG GGGGGGGGGGGGGGGG / created in 1>3: during the Ireat %epression4 -rovides cash
trans8ers o8 retirement income4
Coo(ing at the ta'les
a'ove3 )hat Economic and
Social implications can
ou 8oresee7
GGGGGGGGGGGGGGGG GGGGGGGGGGGGGGGG / cash trans8er 8unded <ointl ' 8ederal and state governments4
Chec(s provide mone to eligi'le )or(ers )ho have lost their <o's4
http:EE)))4'ls4govElauEta'les4htm
34
Table 0 1mericans 1ge '& or 2lder
1334,1554
6ear
7umber of 1mericans 1ge
'& or 2lder
0CC;
0C3;
03;;
030;
03?;
03@;
03:;
03B;
034;
03K;
03C;
033;
?;;;
0.K million
?.: million
@.; million
@.3 million
:.3 million
4.K million
3.; million
0?.K million
0K.? million
?;.3 million
?4.0 million
@0.3 million
@:.3 million
Table 10 8ife Expectancy for Social Security
6ear
Cohort
Turned '&
9ercentage of 9opulation Surviving from 1ge
1 to 1ge '&
1verage :emaining 8ife Expectancy for
Those Surviving to 1ge '&
(ale Female (ale Female
03:;
03B;
034;
03K;
03C;
033;
B@.3
B4.?
4;.0
4@.K
4K.C
K?.@
4;.4
4B.B
K0.@
K4.3
C;.3
C@.4
0?.K
0@.0
0@.?
0@.C
0:.4
0B.@
0:.K
04.?
0K.:
0C.4
03.0
03.4
GGGGGGGGGGGGGGGGG GGGGGGGGGGGGGGGGGGG / provides cash trans8er o8 state 8unds to )or(ers in<ured on the
<o'4 0ost emploers must pa )or(ers= compensation insurance to cover an 8uture claims their
emploees might ma(e4
I4E4 0r4 0artin=s torn ACC at open gm )hile )or(ing at E0,S4
In-Rind Lene&ts / goods and services provided 8or 8ree or at greatl reduced prices4 I4E4 8ood
stamps3 su'sidi"ed housing3 legal aid
0edical Lene&ts / United States government provides health insurance 8or the elderl3 the
disa'led and the poor
GGGGGGGGGGGGGGGG / over age o8 5: and the disa'led
GGGGGGGGGGGGGGGG / covers some poor people )ho are unemploed or not covered ' their
emploers insurance4
Education / Federal3 state and local governments provide educational opportunities to the poor4
Faith Lased Initiatives / religious organi"ations3 US %ept o8 ,ealth and ,uman Services -
%ail !en
EF 1-5 and E0I1 EF1a
1. EF1a0 1ny resources that are made by humans and used to create other goods and services are called
a. Services
b. 9roduction
c. Capital
d. 8abor
. EF1a0 1n example of a shortage is limited amounts of
a. ;ater available for irrigating a crop because it is used for other crops
b. 8abor available because the wor!ers have other <obs
c. Food available because the truc!s carrying it are on stri!e
d. Food available because few people want to buy it
". EF1a0 The lac! of which of the following represents a scarcity=
a. 2range <uice because the truc!s carrying it are on stri!e
b. Enough wor!ers to finish two <obs because there>s a limited supply of wor!ers
c. Enough wor!ers to wor! at night because the pay is too low
d. .rapefruit <uice because very few people want to buy it
$. EF1a0 ;hy are all goods and services scarce=
a. Some goods cost more than others
b. 1ll resources are scarce
c. Some things are needs and others are wants
d. Some people want to have more goods than others
&. EF1a0 ;hich of the following is an example of scarcity, rather than shortage
a. 1 popular toy is sold out during the busy holiday season
35
b. 6ou have spent your last penny and payday is a wee! away
c. 1 person wants an endless supply of everything but cannot have it
d. .asoline was rationed in 1merica during ;orld ;ar ))
'. EF1b0The resources used to ma!e all goods and services are the
a. production possibilities
b. factors of production
c. production trade,offs
d. opportunity costs
?. EF1b0 ;hat is a factory building an example of=
a. *uman capital
b. 9hysical capital
c. 1n economic trade,off
d. Technology
3. EF1b0 2ne example of an entrepreneur is
a. 1 writer who is hired by a film studio to adapt a novel into a screenplay
b. 1 lawyer in a high,profile law firm that speciali#es in business law
c. 1n 2lympic ice s!ater who later decides to <oin a professional ice show
d. 1n artist who runs a business painting murals in office buildings and restaurants
5. EF1c0 1ll of the following are types of decisions that can be made at the margin E@CE9T
a. ;hether to grow beans or corn on a large farm
b. ;hether or not to hire 144 new wor!ers
c. ;hether to leave early in the morning or late in the day for a trip
d. ;hether or not to go on vacation
14. EF1c0 The government of a country must ma!e a decision between increasing military spending and subsidi#ing
wheat farmers. This !ind of decision is a
a. .uns or butter
b. Aecision at the margin
c. .lobal trade,off
d. Basic economic decision
11. EF1c0 1 nation>s automa!ers install new robotic machinery to build cars. 7ow, cars ta!e only a day to ma!e, and the
factories can produce many more cars than before. This is an example of growth caused by
a. 8and and natural resources
b. *uman capital
c. Technology
d. 9roduction possibilities curves
1. EF1d0 1n efficient economy is one that
a. *as very few people who do not wor! for a living
b. (a!es less use of all its goods and services
c. Cses its resources to ma!e the most goods and services
d. (a!es the least costly use of it resources
1". EF1d0 The opportunity cost of a decision can be examined by using a
a. 9roduction possibilities graph
b. Factors of production chart
c. .lobal trade,off grid
d. .raph of increasing costs
1$. EF1d0 9roduction possibilities frontiers curve when they are charted on a graph because they show
a. The underutili#ation of resources
b. The maximum output of goods and services
c. The increasing costs resulting in increasingly less output
d. The technological level of the economy>s productivity
36
6
A
%
D
baseballs
+
@; 4; 3; 0?; 0B; 0C; ?0; ?:; ?K; @;; @@; bananas
?B
B;
KB
0;;
0?B
0B;
0KB
?;;
??B
1&. EFa0 :efer to Figure. The opportunity cost of this economy moving from point 1 to point C is
a. #ero.
b. ?& baseballs.
c. 1& baseballs.
d. 1& baseballs and $4 bananas.
e. $4 bananas.
1'. EFa0 :efer to Figure.
The opportunity cost of this economy moving from
point A to point B is
a. #ero.
b. &4 baseballs.
c. '4 bananas.
d. &4 baseballs and '4 bananas.
e. '4 baseballs and &4 bananas.
1?. EFa0 :efer to Figure. ;hich of the following would most li!ely have caused the production possibilities frontier to
shift outward from 1 to B=
a. a decrease in unemployment
b. a technological advance in the consumer goods industries
c. a general technological advance
d. an increase in the availability of capital,producing resources
e. an increase in demand by consumers.
13. EFb0 :efer to Table 1bove. ;hich option has the greatest opportunity cost=
a. wor! & hours
b. wor! $ hours
c. wor! " hours
d. wor! hours
15. EFb0 :efer to Table 1bove. ;hich option has the least benefit=
a. wor! 1 hour
b. wor! hours
c. wor! " hours
d. wor! $ hours
4. EFb0 :efer to Table 1bove. ;hich option will earn the most money the %uic!est=
a. wor! & hours
b. wor! $ hours
c. wor! " hours
d. wor! hours
3>
1. EF"a0 ;hich country has a comparative advantage in corn and melons=
a. Cnited States , Corn and (exico , (elons
b. Cnited States + (elons and (exico + Corn
c. Cnited States should produce both Corn and (elons
d. 7one of the above
. EF"b0 *ow does voluntary exchange help everyone compete in the mar!et place=
a. it allows them to decide what and when they want to buy and sell
b. it allows them to decide to buy a car at a particular price
c. it allows them to decide if the purchase is worth paying for
d. all of the above
". EF"b0 From the principle of voluntary exchange, we conclude that0
a. often buyers are made better off at the expense of sellers
b. often sellers are made better off at the expense of buyers
c. both the buyer and the seller must be better off as a result of a transaction
d. neither the buyer nor the seller are necessarily made better off as a result of a transaction
$. EF"b0 The concept that people may decide what and when they want to buy and sell
a. voluntary exchange
b. fraudulent exchange
c. competition
d. economic integrity
&. EF$a0 ;hat incentive motivates a manufacturer to sell a product=
a. ma!ing profits on sales
b. putting others out of business
c. pleasing the consumer
d. popularity of the product
'. EF$a. ;hat is one of the most important advantages of a free mar!et=
a. it can change rapidly
b. it protects the less fortunate
c. it is easy to regulate
d. it encourages growth
?. EF$a0 ;hy does the free mar!et economy need some government intervention=
a. to provide for things that the mar!etplace does not address
b. to ensure the government has the freedom to tax as necessary
c. to ma!e sure that the government can fulfill its needs for military personnel
d. so that the government has some control over factor resources
3. EF$a0 )n what !ind of economy does the government ma!e all the decision=
a. socialist
b. laisse# faire
c. centrally planned
d. free enterprise
5. EF$b0 ;hat is the purpose of competition=
a. to act as a regulating force in the mar!et place
b. to cause producers to attempt to put each other out of business
3G
C.S. Corn
&
(elons

(exico 1 1
c. to cause buyers and sellers to be careful about spending their money
d. to act as a motivating force behind the free mar!et
"4. EF$b0 ;hat is the function of an economic system=
a. to ma!e sure all people have e%ual access to goods
b. to produce and distribute goods and services
c. to give all producers the same access to consumers
d. to ma!e sure people are paid for their labor
"1. EF$b0 6ou are an entrepreneur with an innovative idea for a new business. )n which !ind of economy would you have
the most opportunity to try to achieve success=
a. mar!et economy
b. command economy
c. traditional economy
d. economy of scale
". EF&a0 ;hy does the government use it powers to ma!e sure that businesses disclose so much information to the
public=
a. to ma!e buyers more !nowledgeable and safer
b. to ma!e it hard for business to ma!e an excess profit
c. to ma!e it easier for consumers to save money
d. to ma!e it easier for business to have good information
"". EF&a0 ;hat is a positive externality=
a. a way to generate trade that will benefit people who are from other countries
b. an economic side effect that generates unexpected benefits
c. a cash flow that will benefit both the government and the business who interact with it
d. an extra payment to welfare recipients
"$. EF&a0 ;hy are public goods considered to be a mar!et failure=
a. because the it is inefficient for the mar!et to produce it
b. there is no incentive for the individual to produce it
c. it is too costly for the individual to produce it
d. all of the above
"&. E()1a. :efer to Aiagram 1bove. ;hat does the upper line of monetary flow, mar!ed D1E show=
a. households pay firms for goods and services
b. firms pay households for the factors of production
c. taxes
d. firms providing money for the households
"'. E()1a0 :efer to Aiagram 1bove.
;hat does the lower half, mar!ed DE represent=
3F
a. factor mar!et
b. product mar!et
c. supply and demand
d. production possibilities frontier
"?. E()1a0 :efer to Aiagram 1bove. ;hat is this model commonly referred to as=
a. Circular Flow (odel
b. 9roduction 9ossibilities Curve
c. Thin!ing at the (argin
d. Supply and Aemand Curve
"3. E()1b0 ;hich of the following is an example of money as a unit of account=
a. purchasing a toy for F3.55
b. lending a friend F&.44
c. opening a savings account at a ban!
d. chec!ing the price of a camera at several stores before buying it at the lowest price
"5. E()1b0 ;hich of the following is an example of representative money=
a. a fur coat
b. diamonds
c. gold earrings
d. an )2C note
$4. E()1b0 ;hich of the following is an example of a barter system=
a. )nstead of paying rent, you clean the house for the owner.
b. )nstead of paying cash for a computer, you use a credit card.
c. )nstead of paying the full amount for a car, you pay 14 percent in cash and pay for the rest in
d. monthly installments
e. )nstead of paying for a purchase in (exico in pesos, you use dollars from the Cnited States.
$1. ;hich of the following is a private organi#ation that attempts to influence public officials to act or vote in ways that
will benefit the group>s members=
a. a. mar!et research group c. public policy group
b. b. free enterprise group d. interest group
$. ;hat is the most effective way for consumers to ma!e their desires !nown to businesses=
a. through mail and phone surveys
b. by protesting and boycotting products
c. by the purchases they ma!e
d. by hiring lobbyists and <oining consumer groups
$". ;hy does the government use its powers to ma!e sure that businesses disclose so much information to the public=
a. to ma!e buyers more !nowledgeable and safer
b. to ma!e it hard for businesses to ma!e an excess profit
c. to ma!e it easier for consumers to save money
d. to ma!e it easy for businesses to have good information
$$. ;hat is a positive externality=
a. a way to generate trade that will benefit people who are from other countries
b. an economic side effect that generates unexpected benefits
c. a cash flow that will benefit both the government and the businesses who interact with it
d. an extra payment to welfare recipients
$&. ;hat does the Temporary 1ssistance for 7eedy Families program provide=
a. retirement income for the elderly
b. cash to the states to help run their welfare programs
c. compensation to all who lose <obs
d. cash to wor!ers in<ured on the <ob
4I
$'. ;hat is the difference between a business cycle and the day,to,day ups and downs of the mar!et=
a. The day,to,day ups and downs of the mar!et can be much more extreme than a business cycle.
b. The day,to,day fluctuations are more li!ely to have an impact on people>s finances.
c. 1 business cycle is usually more restricted, whereas mar!et fluctuations are worldwide.
d. 1 business cycle is a ma<or, prolonged fluctuation rather than a day,to,day movement.
$?. ;hat best describes the role of government in a free enterprise system=
a. Control business activities.
b. Aecide what companies will be formed and then allow the managers to run them.
c. 1llow individuals to operate their businesses in ways they thin! will maximi#e their profits.
d. :e%uire companies to disclose information to consumers.
$3. ;hat effect does new technology usually have on an economy=
a. )t ma!es the economy stronger and more efficient.
b. )t reduces the dependence of the economy on business.
c. )t slows an economy down for at least a while.
d. )t reduces the available <obs.
$5. ;hich of the following is a critical rule for determining whether something is a public good=
a. The benefit to each individual who uses the facility is greater than the cost.
b. The benefits of the facility are greater for the society than for the individuals using it.
c. The total benefits to society are greater than the total cost.
d. The total cost is small for each individual taxpayer.
&4. ;hich of the following is 72T an example of a public good=
a. a. shopping malls c. highways
b. b. national par!s d. municipal libraries
&1. ;hat protections does 2S*1 give to people in the Cnited States=
a. a. regulations on wor!place safety and information about ha#ards in the wor!place
b. consumer protection in buying foods
c. regulations about clean environment
d. protection for certain !ey industries such as logging
&. ;hat is the term for the total value of all goods and services produced in a particular economy=
a. a. net worth c. gross domestic product
b. b. open mar!et value d. standard of living
&". ;hat is one benefit provided by Social Security=
a. medical care for the indigent
b. cash transfers to wor!ers in<ured on the <ob
c. compensation for all who lose <obs
d. retirement income for the elderly
&$. 1 person who consumes a good or service but does not pay for it is called which of the following=
a. a. a free rider c. a private consumer
b. b. a volunteer user d. an entrepreneur
&&. 1utoma!ers are re%uired to comply with public disclosure laws. ;hat is one example of a re%uirement of these laws=
a. Salespeople must provide information about their competitors> cars, so customers can ma!e informed
decisions.
b. Car dealers must prominently display a stic!er with the fuel efficiency in the car window
c. Salespeople must be willing to sell cars to anyone who can afford them, regardless of gender, race, or
ethnicity.
d. 1utoma!ers must test all car models regularly for crash,worthiness.
&'. 1n externality is
a. an economic side effect of a good or service that generates benefits or costs to someone other than the person
deciding how much to produce or consume.
41
b. the total cost to society of producing an additional unit of a good or service.
c. the amount a consumer pays to consume an additional amount of any particular good.
d. a situation in which the mar!et, on its own, does not distribute resources efficiently.
&?. )n 155', a new federal welfare program called Temporary 1ssistance for 7eedy Families GT17FH began assisting poor
families. ;hich of the following was 72T a provision of T17F=
a. a. direct cash payments to recipients c. lifetime limit of benefits
b. b. wor! incentives d. state,run welfare programs
&3. The C.S. Constitution guarantees certain rights that allow people to engage in business activities. ;hich of the
following does the C.S. Constitution 72T guarantee=
a. the protection against monopolies and oligopolies
b. the recognition and protection of private property rights
c. a limitation on the !inds of taxes that Congress can impose
d. the right to ma!e binding contracts
&5. ;hy is legal e%uality important to the free enterprise system=
a. Ensuring that all businesses have the same legal rights will create healthy competition in the mar!etplace.
b. :e%uiring all lawyers to obtain the same education will ensure that all business clients receive competent legal
representation.
c. 9rotecting legal e%uality ma!es sure that all people may decide what legal agreements they want to enter into.
d. .uaranteeing all people the same legal rights will maximi#e the use of human capital.
'4. 1 large telephone company has hired lobbyists to try to persuade lawma!ers to reduce governmental regulation over
the telecommunications industry. ;hy might the company do this=
a. Some regulations are costly to implement and cut into profits.
b. (any regulations promote too much competition, driving down prices.
c. Certain regulations result in rapid business growth, which some companies find difficult to handle
d. 1ll of the above
'1. 6ou read an article in a news maga#ine that explains how the economy expanded for several years, then went into a
period of contraction. ;hat was the sub<ect of this article=
a. a. the gross domestic product c. the business cycle
b. b. microeconomics d. voluntary exchange
'. To stabili#e the economy, policyma!ers try to achieve three main outcomes0 high employment, steady growth, and
a. a. technological advancement. c. competition.
b. b. stable prices. d. consumer confidence.
'". ;hy does the government protect inventors and authors by offering them patents and copyrights=
a. a. to encourage free trade c. to regulate the business cycle
b. b. to promote innovation d. to strengthen 1merican culture
'$. ;hich of the following is the best example of a public good=
a. a. highway system c. country club
b. b. shopping mall d. movie theater
'&. 6ou will still be able to get public broadcasting whether or not you contribute to their fundraising campaign. 6ou
decide not to contribute. This is an example of the
a. a. public good problem. c. externality problem.
b. b. public sector problem. d. free,rider problem.
''. 1 new runway has opened up at the airport, and the flight path goes directly over your apartment. The noise of the
airplanes is a
a. a. positive externality. c. negative externality.
b. b. free,rider problem. d. mar!et failure.
'?. Each payday, some of your pay is withheld as payroll deductions for Social Security. ;hat happens to the money that
is withheld=
42
a. )t is redistributed as cash transfers to wor!ers who are in<ured on the <ob.
b. )t is put into an account under your name to earn interest until you retire.
c. )t is used to provide medical benefits to 1mericans over '&.
d. )t is redistributed as cash transfers to elderly and disabled people.
'3. Ieff and (argaret %ualify for Section 3 housing, a subsidi#ed housing program from the federal government. ;hat
!ind of benefit are they receiving=
a. a. cash transfer c. Social Security benefits
b. b. in,!ind benefit d. faith,based initiative
43