Unit 1 Study Guide

Directions: On a separate piece of paper, define the following terms.

1. Scarcity

2. Shortage

3. Needs

4. Wants

5. The 3 basic economic questions

6. Opportunity Cost

7. Capital

8. Labor

9. Land/natural resources

10. Circular Flow Model (Define and explain its components)*

11. Government regulation

12. Competition (Define and explain what its impact on the economy is)*

13. Entrepreneur

14. Incentive

15. Capitalism/Free Enterprise (know the advantages and disadvantages)*

16. Mixed economy (know the advantages and disadvantages)*

17. Socialism (know the advantages and disadvantages)*

18. Economic Freedom

19. Property Rights

20. Production Possibilities curve (know what it is and what has to happen for the curve to move)*

21. Government and the circular flow (know what the interactions between government and firms and households are)

* = There will be several questions on the test about these concepts.