Download Chapter 1 Book Work

Chapter 1 Book Work
True/False
Indicate whether the sentence or statement is true or false.
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1. A nondurable good lasts for less than five years when used on a regular basis.
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2. The paradox of value occurs when some necessities have little value, while some non-necessities have a much
higher value.
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3. Economic growth occurs when a nation's total output of goods and services increases over time.
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4. A nation's wealth refers to a worth that can be expressed in dollars and cents.
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5. Division of labor increases efficiency because it allows workers to master many aspects of their jobs.
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
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6. The situation in which some necessities have little value while some non-necessities have a much higher
value is known as
a. paradox of value.
c. trade-offs.
b. opportunity cost.
d. economic interdependence.
7. Manufactured goods needed to produce other goods and services are called
a. nondurable goods.
c. Gross Domestic Product (GDP).
b. capital goods.
d. consumer goods.
8. To arrive at an economic decision, a decision-making grid may be used to evaluate
a. productivity.
c. alternative choices of action.
b. only durable goods.
d. only capital goods.
9. Division of labor is a characteristic of
a. home craft businesses.
c. classroom education.
b. assembly line production.
d. entrepreneurship.
10. The study of economics is important because it enables us to
a. describe our standard of living.
b. increase our consumption of consumer goods.
c. become better decision makers.
d. determine what goods ought to be produced.
11. The dollar value of all final goods and services and the most comprehensive measure of a country's total
production output is
a. its standard of living.
c. a cost-benefit analysis.
b. financial capital.
d. Gross Domestic Product (GDP).
12. A popular model used to illustrate the concept of opportunity cost is
a. the production possibilities frontier.
c. the paradox of value.
b. entrepreneurship.
d. the factors of production.
13. An economy at its production possibilities frontier is operating
a. with slow economic growth.
c. without division of labor.
b. at full potential.
d. as a free enterprise economy.
14. The money used to buy the tools and equipment needed for production is known as
a. capital goods.
c. financial capital.
b. the factors of production.
d. wealth.
____ 15. Actions in one part of the country or world that have an economic impact on what happens elsewhere are
examples of
a. opportunity costs.
c. specialization.
b. trade-offs.
d. economic interdependence.
Completion
Complete each sentence or statement.
16. ____________________ describes the concept that everything we do has a cost.
17. WHAT, HOW, and FOR WHOM to ____________________ are the three basic economic questions.
18. The ____________________ of production include land, labor, capital, and entrepreneurs.
19. ____________________ is a key measure of a nation's economic health.
20. The study of ____________________ helps all of us to become more informed citizens and better decision
makers.
21. A ____________________ grid can be used to evaluate alternatives.
22. The opportunity cost of doing something is the next best alternative, or ____________________, that you
give up.
23. A production possibilities frontier shows the various possible combinations of output than can be produced
when all ____________________ are fully employed.
24. When economic growth takes place, the ______________________________ shifts outward, showing that
more products are produced than before.
25. The study of economics helps people make better ____________________.
Matching
Match each statement with the correct item below.
a. diagram representing various combinations of goods and/or services that an economy can
produce when all productive resources are fully employed
b. any good that lasts three years or more when used regularly
c. process of using up goods and services to satisfy wants and needs
d. process of creating goods and services
e. market where productive resources are bought and sold
f. economy in which consumers and privately owned businesses make the majority of the
WHAT, HOW, and FOR WHOM decisions
g. basic requirement for survival
h. manufactured goods that are used to produce other goods
i. way of expressing a need that leads to a preference for some goods over others
j. work that is performed for someone
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26.
27.
28.
29.
30.
capital good
consumption
need
want
service
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31.
32.
33.
34.
35.
production possibilities frontier
production
factor market
durable good
free enterprise economy
Short Answer
36. Drawing Inferences and Conclusions What factor of production would Adam Smith be most likely to
identify as the source of a nation's wealth? Do you concur? Explain.
APPLYING SKILLS
Using Graphs: Study the graph and answer the questions below.
37. In which year was the Gross Domestic Product at its lowest?
38. Estimate the percentage increase in GDP between 1992 and 2000.
39. What was the approximate GDP in 1993?
40. By approximately how much did the GDP increase between 1990 and 1998?