Assessment and Activities

Self-Check Quiz Visit the Economics: Principles and Practices Web site at and click on Chapter 1—Self-Check Quizzes to prepare for the chapter test.

Self-Check Quiz Visit the Economics: Principles and Practices Web site at and click on Chapter 1—Self-Check Quizzes to prepare for the chapter test.

Identifying Key Terms

Write the key term that best completes the following sentences.

capital goods opportunity cost consumer goods scarcity consumers services factors of production utility human capital value

1. Economic products designed to satisfy people's wants and needs are called_.

. of a CD player can be expressed in dol-

lars and cents.

3. Haircuts, repairs to home appliances, and entertainment are examples of_.

4 ._arises because society does not have enough resources to produce all the things people would like to have.

. of going to a football game instead of working would include the money not earned at your job.

6 ._is the sum of the skills, abilities, health, and motivation of people.

7 ._is another name for the capacity of a product to be useful.

8. The only factors of production that are themselves the result of earlier production are_.

9. Land, capital, labor, and entrepreneurs are_.

10. People who use goods and services to satisfy their wants and needs are called_.

Reviewing the Facts

Section 1 (pages 5-10)

1. Identify the cause of scarcity.

2. List the three basic economic questions that every society must face.

3. Describe the factors of production required to deliver a service like education.

4. Explain why economics is considered a social science.

Section 2 (pages 12-17)

5. Describe the relationship between goods, services, and consumers.

6. Explain why services are excluded from the measure of wealth.

7. Distinguish between product markets and factor markets.

8. Explain why economists argue that productivity is important.

Section 3 (pages 19-25)

9. Describe the nature of an opportunity cost.

10. Identify the economic concept illustrated by the production possibilities frontier.

11. Describe incremental decision making.

12. Explain why economic education is important.

Thinking Critically

1. Understanding Cause and Effect Suppose that Alpha, shown in Figure 1.6 on page 23, decided to produce more guns and less butter. What would Alpha have to do to make the change? What would be the opportunity cost of producing more guns? What conditions would have to be met for the new mix of guns and butter to be on the production possibilities frontier?


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