Unit I: Study Guide
I. Economics
1. What does economics mean?
economics is the study of how limited resources are located for supply and demand.
II. Economist
1. What do they do?
they study the corelation between a communities resources and the supply and demand of that community
2. Where do they work?
state or federal agency
3. Why would thinking like an economist make you more equipped to make decisions?
bc it can hep you to get a wider veiw on the situation
III. Two main types of economics?
1. What is the focus of macroeconomics?
focuses on the performance and behavior of a whole economy.
2. What is the focus of microeconomics?
focuses on how consumers make decisions to find resources they need to make a product or service.
IV. Measurements:
1. What does GDP measure?
the total market value of all final goods produced in a country in the span of a year
2. What does CPI measure?
measures what the prices of a certain good is and then what consumers are paying for this good
V. Scarcity
1. What does it mean?
scarcity is when the means to fulfill ends are limited and costly
2. Why is scarcity the most important concept in economics?
bc it is a essential problem in a economy
3. What are the 3 main causes of scarcity?
demand, supply, and structural.
4. What are the 2 types of scarcity?
absolute and relative
5. What are the 3 main economic questions?
what to produce? how to produce? who gets to consume?
6. What model do economists use to explain the idea of scarcity?
time, fine art, and land
VI. Adam Smith
1. What books did he write?
the wealth of nations
2. Describe the invisible hand.
natural phenomenon that pushes free markets and capitalism in the way of efficiency
3. What were the 3 laws of economics and be sure to explain each?
competition which is the law that states that competition between companies is good, law of self interest which
means if you care for yourself iit can help the whole economy, the law of supply and demand which states that
if you work with supply and demand your economy will be better.
4. What was the role of government in the economy? (Be sure to include a key French term)
the role of government in economy is to stay out and the french term is laissez-faire
5. What was the impact of assembly-line production?
the impact is that it gives people more pay bc 1 person is doing 1 movement and then passing it on
6. Before & after the Wealth of Nations:
i. How was wealth determined? gold and silver deposits, gdp
ii. What was the belief about trade? it was not safe, then it was safe
7. Why do people choose the occupations they do?
self interest
VII. Economic Systems
1. Mercantilism
a strategy that trys to acheive prosperity and power through restrictive trade
2. Market
i. Definition
any place that trade takes place
ii. Who decides what to produce, how to produce and for whom?
the producers
iii. What are the advantages?
individual choice
iv. What are the disadvantages?
pooror working conditions
3. Command
government control the production of goods and services
i. Who decides what to produce, how to produce and for whom?
the government
ii. What are the advantages?
no unemployment
iii. What are the disadvantages?
lack of competition
VIII. Karl Marx
1. What should workers do?
unify
2. What does he want to abolish and why?
he wants to abolish private ownership of resources and materials
3. How should workers achieve their goals?
by grouping together they can overcome private resources
IX. Marx v. Adams
1. Consider the following people from 19th-century Britain: factory worker, shop owner, factory
owner, and an unemployed artisan. Which of them would be most likely to prefer capitalism and
which would prefer socialism? Why?
2. How does Marx respond to people who claim the communist goal to eliminate private property
would take away all incentive to work and lead people to be lazy?
3. Is Marx right, those in charge have control of society, not just the money. If so, can the workers
change society?
4. Be able to read, interpret and paraphrase their writings.
