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| Question | Answer |
| Why does scarcity exist | Scarcity exists because we can't satisfy our wants |
| How is opportunity cost defined | What you lose when you do something else Ex. Going to school OC: You can't work |
| What do economist call the cost of one unit increase in activity | Marginal Benefit |
| How would economist describe making a rational choice | When they look at marginal benefit and marginal cost to compare |
| What do economist mean by an incentive | It can be a reward or penalty that can encourage or discourage an action |
| What is a capital good | A good that will increase productivity or help your production in future years |
| What are the categories for factors of production | Land, Labor, Capital, Entreprenuership |
| What things lead to increases in human capital | Education, Job training and experience help this capital |
| What two groups of decision makers are represented in the basic circular flow | The two groups are firms and households |
| What is the difference between the two markets in the circular flow model | Factor markets are for land, labor, capitol, and entrepreneurship while goods markets are for everything consumers buy |
| What does the Production Possibilities Frontier illustrate | This illustrates the boundary of a combo of goods and services that can be produced and the combos that can't be produced. (Basically what can you make with what you have.) |
| How is unemployment shown on a PPF diagram | This is shown when the point isn't on the PPF curve and is described as Inefficient production |
| What is the formula for calculating the opportunity cost of producing one more unit of product | The formula is a ratio and are also inverses |
| Why do opportunity costs increase as we move along a country's PPF | Because the more you make the less resouces you have to produce the other product |
| How do economist define economic growth | By the sustained growth of a PPF |
| What is the opportunity cost of economic growth and what is the benefit | The opportunity cost is either capital goods or consumption goods and the benefit is we can have more capital and consumption goods |
| What is the relationship of comparative advantage and absolute advantage | Absolute advantage means the person is more productive. Comparative Advantage means the person can do the work at a lower opportunity cost. One is about productivity and the other is about opportunity cost. |
| What is the definition of comparative advantage | When someone can do the same job or work at a lower opportunity cost |
| What do economist mean by the phrase quantity demanded | This is a movement that is vertical on the demand curve and shows where is the demand of the consumers |
| How would a change in the number of buyers affect the demand for a good | The demand would increase if the population incresed because their is more consumers and V.V. |
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