1. Unit 1: Fundamental Concepts
Economics

2. Nothin’ is free!!
What are some goods or services that appear to be free?
Why are these goods not really free?
There is no such thing as a free lunch!!

3. WHAT IS THE FUNDAMENTAL ECONOMIC PROBLEM?

4. Seemingly Unlimited Wants

5. Limited Resources

6. (Factors of Production)
Scarcity of Resources
(Factors of Production)

7. Leads to Choices

8. Natural Resources used
Economic Resource
Natural Resources used
for production
Land
Minerals and Land

9. Human input put into the
Economic Resource
Human input put into the
production process
Labor
Pilots, Teachers,
Factory Workers

10. Economic Resource Capital Investment in goods that
can produce other goods
in the future
Capital
Ex. Machines, roads,
factories, offices

11. Ex. Bill Gates-Microsoft
Organize economic
resources to make
goods and services
Entrepreneurship
Ex. Bill Gates-Microsoft

13. Which sentence BEST describe the economic problem of scarcity?
It exist only in poor, underdeveloped nations.
It exists only after a natural disaster
It existed only in the past when there was not technology.
It is the basic economic problem facing all societies.

14. Which sentence BEST describe the economic problem of scarcity?
It exist only in poor, underdeveloped nations.
It exists only after a natural disaster
It existed only in the past when there was not technology.
It is the basic economic problem facing all societies.

15. A teenager named Rosa started a pet-walking
business. She found customers and hired workers
for her business. What productive resource does
Rosa represent?
Entrepreneurship
Labor
Land
Capital

16. A teenager named Rosa started a pet-walking
business. She found customers and hired workers
for her business. What productive resource does
Rosa represent?
Entrepreneurship
Labor
Land
Capital

17. What is Opportunity Cost?
Next best alternative use of time, money, or resources

19. Name 5 activities that you could do after school (tradeoffs)
1. Work
2. Sports
3. Watch T.V.
4. Homework
5. Sleep
Circle the thing that you would most like to do after
school. Put a star by the thing that would be a second
choice.

20. What was your Opportunity Cost from the choices above
What was your Opportunity Cost from the choices above? (next best use of time money, or resources).
You gave up time sleeping, or any of the other on your list that you could have been doing besides watching T.V. So for an hour or two of watching T.V., your opportunity cost is sleep.

21. A person decides to spend $20 on a ticket to a football game instead of buying a warm jacket for $20. What is the opportunity cost of this decision?
$20
The benefit of owning a warm jacket
The enjoyment of the football game
The opportunity to learn about football.

22. A person decides to spend $20 on a ticket to a football game instead of buying a warm jacket for $20. What is the opportunity cost of this decision?
$20
The benefit of owning a warm jacket
The enjoyment of the football game
The opportunity to learn about football.

23. EXTRA! EXTRA! Marginal benefit/Marginal Cost Activity This activity will help you understand the principal of marginal benefits and marginal cost as it relates to economics. First of all, marginal means extra. Marginal benefits are the extra benefits from doing something extra and the marginal cost are the extra cost from doing something extra. Situation: You study an extra two hours for a big unit test in Ms. Bond’s Economics class. Think about your marginal benefits and marginal cost associated with studying for an extra two hours and lists two benefits and two costs below. After considering your marginal benefits and cost, do the benefits outweigh the cost and if so you should study two extra hours!

24. EXTRA! EXTRA! Marginal benefit/Marginal Cost Activity
Marginal Benefits
Marginal Cost

25. What is the Production Possibilities Curve/Frontier?
How Opportunity Cost are illustrated
Diagram that represents the combinations of goods and services an economy can produce

26. Production Possibilities Curve for Morovia
Two Choices
Food
Computers

27. To be on the frontier of the curve:
All resources must be used
Full Employment
What causes a shift in the PPC?
Increase in resources (FOP)
Increase in productivity
Increase in technology

28. What is a rational economic decision?
One in which there are no opportunity costs.
One in which benefits are unknown, but cost are low.
One in which marginal benefits are greater than marginal cost.
On in which marginal cost are greater than marginal benefits.

29. What is a rational economic decision?
One in which there are no opportunity costs.
One in which benefits are unknown, but cost are low.
One in which marginal benefits are greater than marginal cost.
On in which marginal cost are greater than marginal benefits.

30. Which point represents an inefficient use of resources?
Point E
Point F
Point G
Point C

31. Which point represents an inefficient use of resources?
Point E
Point F
Point G
Point C

32. A developing nation is just beginning to invest in new technology that will improve productivity in its farms and factories. What change in the nation’s production possibilities curve would you expect in the future?
the shift from curve AB to curve EF
The shift from curve AB to curve CD
Movement from point G to point H
Movement from point H to point G

33. A developing nation is just beginning to invest in new technology that will improve productivity in its farms and factories. What change in the nation’s production possibilities curve would you expect in the future?
the shift from curve AB to curve EF
The shift from curve AB to curve CD
Movement from point G to point H
Movement from point H to point G