<p> Unit 1: Fundamentals of Economics Study Guide – Chapter 1</p><p>NAME: ______Period: ______</p><p>Section 1: Scarcity: The Basic Economic Problem (Lesson 1)</p><p>Wants</p><p>Needs</p><p>Scarcity</p><p>Economics</p><p>Goods</p><p>Services</p><p>Consumer</p><p>Producer</p><p>Factors of Production</p><p>Land</p><p>Labor</p><p>Capital Entrepreneurship</p><p>1. Look up the definition of scarcity in the dictionary. How is the economic definition different from the common definition?</p><p>2. Provide 2 examples of how scarcity affects everyone.</p><p>3. What are the 3 economic questions that societies face because of scarcity?</p><p>4. What are the four factors of production and their uses?</p><p>------Section 2: Opportunity Cost (Lesson 2)</p><p>Incentives</p><p>Utility Economize</p><p>Trade-off</p><p>Opportunity cost</p><p>Cost-benefit analysis</p><p>Marginal cost</p><p>Marginal benefit</p><p>1. Why is choice at the center of economics?</p><p>2. How do incentives and utility influence people’s economic choices?</p><p>3. What role do trade-offs and opportunity costs have in making economic choices?</p><p>4. You are on a limited budget and planning a 4-day trip to St. Louis, MO. Bus fare is $75 each way and the ride takes 12 hours. Plane fare is $150 each way and the ride takes an hour and a half. On a separate sheet of paper, conduct a cost-benefit analysis to help you choose your method of travel. ------Section 3: Analyzing Production Possibilities (Lesson 3)</p><p>Economic Model</p><p>Production possibilities curve</p><p>Efficiency</p><p>Underutilization</p><p>Law of increasing opportunity costs</p><p>1. What is a production curve and how is it constructed? 2. What do economists learn from using production possibilities curves (PPC)?</p><p>3. An economy that only produces corn and TV sets. Use the data to create a PPC.</p><p>Bushels of Corn Television Sets (in thousands) (in thousands) 10 0 9 1 7 2 4 3 0 4 ------</p><p>Remember to label the axis. Label the following points on your PPC: A The point at which the economy makes all TVs and no corn B A point representing efficiency C A point representing underutilization D A point representing an impossible level of production</p><p>4. How do PPCs show economic growth?</p><p>------Section 4: The Economist’s Toolbox (Lesson 4)</p><p>Statistics</p><p>Microeconomics</p><p>Macroeconomics Positive economics</p><p>Normative economics</p><p>1. How and why do economists use economic models?</p><p>2. How and why do economists use statistics, charts, tables, and graphs? Address each individually.</p><p>3. Compare microeconomics with macroeconomics.</p><p>4. Explain the difference between positive economics and normative economics.</p>