Section 1 Guided Reading and Review Scarcity and the Factors of production

As you read Section 1, supply in the space provided an explanation an economist might give showing why each statement is true. Possible answers below Statement

Explanation

1. People must make choices to satisfy their needs

1. Goods and services are limited. or scarce.

2. Scarcity always exists.

2. Our needs and wants are always greater than our

and wants.

3 . Physical capital is an important factor of

resource supply.

production.

3. Physical capital can save people time and money.

4. All goods and services are scarce. 5. Entrepreneurs are important to the production of goods and services.

4 . The land. labor, and capital needed to produce them are scarce, or limited. 5. Entrepreneurs bring the factors of production together.

B. Reviewing Key Terms Complete each sentence by writing the correct term in the blank. 6 . A CD player is a

survival.

-"w""a"-!n"t -

_ __

___

rather than a need because it is not necessary to

7. The study of how people seek to meet their needs and wants by making choices is

economics

Q E C

8. Persons who perform such actions as cutting hair or teaching school are providing

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9. When producers will not or cannot offer goods and services at current prices, a

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services

shortage

occurs.

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10. Land, labor, and capital make up the factors of production .

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11. When people make resources for producing other goods and services they are creating capital

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12 . The term

land refers to water, forests, and all other natural resources used to produce goods and services.

13. The two categories of capital are physical and

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14. Factories, machinery, and pencils are all examples of

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___

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capital.

15. Leaders who take risks to develop original ideas and start new industries are called entrepreneurs

Guided Reading and Review

Chapter 1

171

NAME

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DATE _________

Section 2: Guided Reading and Review

Opportun ity Cost A. As You Read As you read Section 2, fill in two supporting facts or details under each main idea by answering each question. Possible answers below

Main Idea: Trade-offs are alternatives that people give up when they choose one course of action over another.

1. Who makes trade-offs ? inaiviauals, businesses, ana governments a... s....:a--'-r�e-"- ..:...:. :...: R.:..; .: 2. Why do decisions involve trade-offs ? .--:.

_

____________

Main Idea: Opportunity cost is the most desirable alternative given up as the result of a decision. 3. How does opportunity cost vary? It varies basea on what is being given up by making the aecision.

The choices of what must be given up vary from situation n .'--4. Why does opportunity cost vary? ....::;::o....:s:..:; : it:..: :::;ac:.;t:.::.i .:.;;

_________________

Main Idea: Deciding whether to do or use one more or one less unit of some resource is thinking at the margin.

is....:io ....:m__a:.:.__ .kin-'.ig'-5. What does thinking at the margin help with ? ...a.: ....: '-'-

_ __________

6. What does thinking at the margin help compare ? opportunity cost ana benefits

B. Reviewing Key Terms Answer each of the following questions. Possible answers below 7. In what way are trade-offs and opportunity costs alike ?

Both traae-offs ana opportunity costs are choices/benefits that inaiviauals or groups give up in favor of another choice/benefit. 8. How does an opportunity cost differ from a trade-off?

An opportunity cost is the most aesirable option of all those available. but there may be more than one traae-off.. 9. What are "guns or butter" decisions ?

Guns or butter decisions are made by countries/societies when they choose to produce more or less military or consumer goods. 10. How does thinking at the margin change the decision-making process? Thinking at the margin considers the relative benefit of doing or using one additional unit of a resource.

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Chapter 1

Guided Reading and Review

NAME

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Section 3: Guided Reading and Review

Productio n Possibi l ities Curves A. As You Read As you read Section 3, complete the chart by indicating where on a production possibilities curve the following information is shown.

Reading a Production Possibilities Curve 1. Categories or specific goods or services to be compared horizontal and vertical axes 2. Range of choices in the combination of goods or services produced points plotted on the graph 3. Production possibilities frontier

line connecting the plotted points 4. An economy working at its most efficient production levels production possibilities frontier 5. An economy working below its most efficient production levels

points inside of the production possibilities frontier 6. Future production possibilities frontier if more land, labor, or capital resources

become available

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line outside of the production possibilities frontier B. Reviewing Key Terms

Define the following terms. 7. production possibilities curve graph that shows alternative ways to use an economy's resources

line on a production possibilities curve that shows the maximum

ss_i_ p_o_ bl_e_o 8. production possibilities frontier -'-

_

9. efficiency using resources in such a way as to maximize the output of goods and services 10. underutilization using fewer resources than an economy is ca pa ble of using

11. cost alternative that is given up because of a decision Shifting factors of production from making one good or service to another 12. law of increasing costs increases the cost of producing the second item.

Guided Reading and Review

Chapter 1

19 1

NAME

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DATE

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Section 1: Guided Reading and Review

Answeri ng the Three Economi c Questions A. As You Read As you read Section 1, supply the missing information about economic systems in the spaces provided.

1. Three economic questions answered: (a) What goods and services should be produced?

(b) How should these goods and services be produced? (c) Who consumes these goods and services? 2. Economic concept necessitating choices and priorities in any society: scarcity-resources are limited 3. Economic question answered by basic social values and goals:

Who consumes which goods and services? 4. Five basic economic goals guiding society's choice of systems: (a) efficiency

(b) freedom (c ) security and predictability (d) equity (e) growth and innovation 5. Four main kinds of economies:

(a ) traditional

(c) centrally planned

(b) market

(d) mixed

B. Reviewing Key Terms \ Complete each sentence by writing the correct term in the blank.

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, .

6. An economic system that relies on habit, custom, or ritual to decide questions of produc­

tion and consumption of goods and services is a

traditional economy

7. An encyclopedia entry illustrating how a hunter-gatherer group collects and shares food

resources is describing that society's

economic system

8. When voluntary exchanges in the markets determine decisions on production and con-

sumption, the society's economic system is a

market economy

9. When people earn income for supplying land, labor, capital, or entrepreneurship, they

receive

factor payments

10. An economic system in which the central government makes all decisions and consumption of goods and services is a centrally planned economy.

on production

11. People who receive disaster relief from the government after a flood are benefiting from an safety net economic system that provides a

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Chapter 2

Guided Reading and Review

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NAME

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CLASS

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DATE

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Section 2: Guided Reading and Review

The Free Market A. As You Read As you read Section 2, list the role 0'[ roles played in a free market economy by each factor in the diagram below.

Roles and Functions in a Free Market Economy

Businesses

regulates production. buying. and selling

own factors of production; produce and buy what they want

own land. labor. and capital; consume goods and services

motivates consumers and producers use resources to produce products. then 5el1 them

B. Reviewing Key Terms

Match the definitions in Column I with the terms in Column II. Write the letter of the correct answer in the blank provided. You will not use all of the terms. Column I

c

Column I I

6. market in which households purchase the goods and services that

firms produce

e

7. an expectation that encourages people to behave in a certain way

8 . power of consumers to decide what gets produced

h

9. market in which firms purchase the factors of production from

households

a _ 10. financial gain made in a transaction _ _g _ 11. concentration of productive efforts of individuals and firms on a limited number of activities

_d_ 12 . an arrangement that allows for exchange among buyers and sellers

Guided Reading and Review

a. profit

b. competition c. product market d. market e. incentive f. self-interest

g. specialization h. factor market i. consumer sovereignty

Chapter 2

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Section 3: Guided Reading and Review

Centra l ly Planned Economies A. As You Read As you read Section 3, supply the missing information in the chart below.

Central Economic Planning in the Former Soviet Union 1. Main goal : builtling national power anti prestige

2. Role of central government: ( a ) control lantl, labor, anti capital

(b) tlecitle what, how much, anti how to protluce anti tlistribute gootls anti services 3. Effects on agriculture:

(a) Positive

workers were guaranteetl employment anti income

(b) Negative lack of incentives to protluce more or better crops; country coultl not feetl its population 4. Effects on industry: (a) Positive jobs anti wages were guaranteetl

(b) Negative lack of worker incentive anti innovation; lower quality resources for consumer gootls 5. Effects on consumers:

(a) Positive

luxuries were affortlable

(b) Negative shortages anti poor quality of gootls anti housing B. Reviewing Key Terms Define the following terms.

6. socialism social anti political philosophy atlvocating equal tlistribution of wealth throughout a society 7. communism political system characterizetl by a centrally plannetl economy with all economic anti

political power resting with the central government 8 . authoritarian requiring strict obetlience to an authority, such as a tlictator

9. collective a large Soviet farm leasetl by the state to groups of peasant farmers 10. heavy industry intlustry that requires a large capital investment anti that protluces items usetl in

What are the factors of production Chapter 1 economics class 9?

What are the factors of production economics Chapter 1?

What are the factors of production * 1 point?

Why people must make choices with respect to meeting their wants and needs?