Download 1st Quarter, Unit 2: Economics Fundamentals (Ch

1st Quarter, Unit 2: Economics Fundamentals (Ch. 13; Ch. 15, sec. 1)
Study Guide
Be able to define or explain:
factors of production:
 land (natural resources)
 labor (human resources)
 capital (factories, machines,
tools)
resource
opportunity cost
good
capital
significance of scarcity in econ
importance of choice
consumption
allocation
productivity
costs and benefits
Pig Principle
law of diminishing returns
profit
invest
currency
capital investment
why people trade
2 ways to increase production
 increase resources
 increase productivity
Advantages, disadvantages, and
incentives in 4 econ systems:
 traditional economy
 command (planned)
economy (socialism,
communism)
 market economy (free
enterprise, free market,
capitalism)
 mixed economy (combination
of capitalism and socialism)
7 allocation methods:
 random draw
 personal characteristics
 performance-based
 willingness and ability to
pay
 first come, first served
 fiat (authority)
 voting
Be able to do:
PACED decision-making process:
P
A
C
E
D
Draw Production Possibilities
Curve (PPC) to explain choice,
scarcity, and opportunity costs.
Describe the functions and
characteristics of money
as medium of exchange, measure
of value, and store of value, with
portability, durability, divisibility,
and limited supply.
Explain:
--What is good and bad about
our economic system?
--What business would you start?
Draw the Circle of Economic Life.