What factors of production Land Labor Capital are

What factors of production (Land, Labor, Capital) are involved in the following? 1. Pencil 2. French Fries 3. Automobile SECTION 1

Section 1 Questions Scarcity and the Factors of Production n What is economics? n How do economists define scarcity? n What is the difference between wants & needs n What are three factors of production? SECTION 2

Section 1 Assessment 1. What is the difference between a shortage and scarcity? A) A shortage can be temporary or long-term, but scarcity always exists. B) A shortage results from rising prices; a scarcity results from falling prices. C) A shortage is a lack of all goods and services; a scarcity concerns a single item. D) There is no real difference between a shortage and a scarcity. 2. Which of the following is an example of using physical capital to save time and money? A) hiring more workers to do a job B) building extra space in a factory to simplify production C) switching from oil to coal to make production cheaper SECTION 3

Section 1 Assessment Cont. . . n 3. The resources used to make goods and services are called: A) factors of production n B) gross national product n C) production possibilities frontier n D) opportunity cost n n 4. Economics is the study of how people: A) calculate their income n B) choose from limited resources to meet their needs n C) respond to war and drought n D) gain knowledge and skills from study and experience n SECTION

Section 1 Assessment Cont… n n 5. Entrepreneurs are people who: n A) help settle labor disputes n B) work on the floor of the stock market exchange n C) put together land, labor and capital to create new businesses and jobs n D) produce all the country’s guns or butter 6. Countries often have to choose between producing military or consumer goods, a trade-off economists call: n A) export or import n B) a free market economy n C) farm goods or factory goods n D) guns or butter 5 SECTION

Section 1 Assessment 7. Shortages occur when: A) many people are unemployed B) interest rates go up C) people have trouble supplying goods and services at current prices D) the United States imports more than it exports 6

Section 2 Questions Opportunity Cost n Does every decision you make involve trade-offs? n How can a decision-making grid help you identify the opportunity cost of a decision? n How will thinking at the margin affect decisions you make? SECTION 7

Section 2 Assessment n What would be the trade-offs and or opportunity costs of the following: ¨ 1. Deciding to go to college ¨ 2. Taking a job after school ¨ 3. Enrolling in AP courses ¨ 4. Going back to work after being a stay at home dad. ¨ Do you think the benefits out way the costs of the decision made? SECTION 8

Section 2 Assessment 1. Who makes trade-offs? 2. What does thinking at the margin help with? 3. How are trade-offs and opportunity costs similar? 4. How are they different? 5. All of the following are trade-offs for a student who spends a semester abroad EXCEPT: A) Eating all of their favorite foods B) seeing friends from home daily C) experiencing the culture of another country D) missing family activities at home 9

Section 2 Assessment 6. Opportunity cost is: A) any alternative we sacrifice when we make a decision. B) all of the alternatives we sacrifice when we make a decision. C) the most desirable alternative given up as a result of a decision. D) the least desirable alternative given up as a result of a decision. 7. Every decision involves trade-offs because: A) everyone has to makes decisions B) everyone’s resources are limited C) some people have more money than others D) some decisions are made for businesses, other for society SECTION 10

Section 2 Assessment 8. A decision making grid is a visual way of: A) examining opportunity costs ¨ B) selling goods or services ¨ C) producing goods or services ¨ D) identifying shortages ¨ 9. If a person who wants to buy a DVD has just enough money to buy one and chooses DVD A instead of DVD B, then DVD B is the: A) trade-off ¨ B) opportunity cost ¨ C) decision at the margin ¨ D) opportunity at the margin ¨ 11

Section 2 Assessment 10. In many recent votes on school budgets, citizens have defeated school tax proposals and forced schools to eliminate extracurricular activities. What if any, are the opportunity costs of such decisions: A) the costs of new public goods tax payers will now buy B) the possible benefits of the extracurricular activities C) the opportunity to use the community’s facility effeciently D) there are no opportunity costs as less money will be spent 11. From an economic point of view, which of the following approaches to pollution control is most efficient? A) abolish the use of toxic chemicals B) use resources to reduce all pollution damage C) control pollution as long as the extra benefits exceed the extra costs D) prohibit economic activities that cause pollution or harm the 12 environment

Section 3 Questions Production Possibilities Graphs n What is a production possibilities graph? n How do production possibilities graphs show efficiency, growth, and cost? n Why are production possibilities frontiers curved lines? SECTION 13

Section 3 Assessment 1. A production possibilities frontier line shows A) farm goods and factory goods produced by an economy. B) the maximum possible output of an economy. C) the minimum possible output of an economy. D) underutilization of resources. 2. An economy that is using its resources to produce the maximum number of goods and services is described as A) efficient. B) underutilized. C) growing. D) trading off. SECTION 14

Section 3 Assessment 3. The law of increasing costs means that as productions shifts from one item to another, A) the cost of production gets cheaper and cheaper B) the cost of producing an item stays the same no matter how many are produced C) more and more resources are necessary to increase production of the second item D) the land costs of increasing production rise much more steeply than do the labor 4. A production possibilities curve shows the relationship between the production of: n n A) farm goods and factory goods B) two types of farm goods C) two types of factory goods SECTION D) any two categories 15

Section 3 Assessment 5. The purpose of a production possibilities curve is to: A) show alternative ways to use an economy’s resources B) show a factory can use its workers in different ways C) give engineers a new way of deciding how to build manufacturing plants D) tell farmers how many watermelons to plant 6. A country’s production possibilities will grow if it: A) produces more guns than butter B) lowers its opportunity costs C) makes more trade-offs D) increases its resources 16