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Questions and Answers
Which economic system is characterized by a minimal role for the government in the economy?
What is the defining feature of a socialist economic system?
Which economic system is characterized by individuals pursuing their own self-interests?
What is an example of opportunity cost?
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What are the benefits of capitalism?
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What is the definition of economics?
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Which of the following best defines scarcity?
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What is the opportunity cost of a decision?
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Which of the following is NOT considered a factor of production?
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What category do renewable and non-renewable resources fall under?
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What term refers to the human effort involved in the production process?
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Which of the following is a form of capital?
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Study Notes
Scarcity
- Scarcity refers to the fundamental economic problem of unlimited wants and needs with limited resources.
- It implies that the needs of individuals are infinite, but the resources available to satisfy those needs are finite.
Opportunity Cost
- Opportunity cost is the value of the next best alternative forgone as a result of making a choice.
- It represents the sacrifice made when choosing one option over another.
Factors of Production
- Factors of production are the resources used to produce goods and services.
- The four main factors of production are:
- Land/Natural Resources
- Labor
- Capital
- Entrepreneurship
Land/Natural Resources
- Land/Natural Resources refer to the natural resources found in the earth's crust, such as minerals, water, and land.
- These resources are used to produce goods and services.
Labor
- Labor refers to the physical or mental effort of humans used to produce goods and services.
- It includes the skills, abilities, and experience of individuals.
Capital
- Capital refers to both physical and human capital.
- Physical capital includes buildings, machines, and equipment used to produce goods and services.
- Human capital includes the education, skills, and experience of individuals.
Competition
- Competition refers to the rivalry among firms for market share and customers.
- It is a key feature of a market economy, promoting innovation, efficiency, and lower prices.
Socialism
- Socialism is an economic system where the government owns and controls the means of production.
- Three key facts about socialism:
- The government plays a significant role in the economy.
- Resources are owned and controlled by the state.
- The goal is to promote social welfare and equality.
- Three examples of socialist countries:
- Cuba
- Venezuela
- Sweden
Communism
- Communism is an economic system where resources are owned collectively by the community.
- Three key facts about communism:
- The means of production are owned and controlled by the community.
- Resources are distributed based on need.
- The goal is to create a classless society.
- Three examples of communist countries:
- North Korea
- China
- Vietnam
Capitalism
- Capitalism is an economic system where individuals own and control the means of production.
- Three key facts about capitalism:
- The means of production are owned and controlled by private individuals.
- Resources are allocated based on market forces.
- The goal is to create profit and wealth.
- Three examples of capitalist countries:
- United States
- Canada
- Australia
Opportunity Cost Example
- An example of opportunity cost is choosing to go to college instead of starting a business.
- The opportunity cost of going to college is the potential income that could have been earned by starting a business.
Benefits and Negatives of Capitalism
- Benefits of capitalism:
- Economic freedom
- Innovation
- Efficiency
- Negatives of capitalism:
- Income inequality
- Exploitation
- Market instability
Benefits and Negatives of Socialism
- Benefits of socialism:
- Equal distribution of resources
- Social welfare
- Stability
- Negatives of socialism:
- Lack of incentive
- Bureaucratic inefficiency
- Limited choices
Pros and Cons of Communism
- Pros of communism:
- Central planning
- Social equity
- Public ownership
- Cons of communism:
- Lack of innovation
- Inefficiency
- Lack of incentive
Economics
- Economics is the study of how people make choices to satisfy their wants and needs with limited resources.
- It examines the behavior of individuals, businesses, governments, and societies in allocating resources.
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Description
Test your knowledge of economics concepts with this multiple-choice pre-quiz. Questions cover topics like scarcity, opportunity cost, and factors of production.
