Unit I: Introduction to Economic Thinking

Please read the first Chapter in your textbook and try to answer the questions and define the terms.

Summary: The first unit sets the stage for the fundamental  lessons of economics and economic thinking. Such questions as "what is economics?'  "how is the concept of scarcity central to understanding economics?" and "what role does opportunity cost decisions play in our daily lives?" will be addressed.

Questions:

1. Explain how scarcity is the fundamental economic problem facing society? What are the three basic questions societies are forced to ask a result of scarcity?
2. Describe the four factors of production.
3. Explain the concept of opportunity cost and how we ultimately come to our decisions.

Chapter Terms (Be able to explain the significance of each term according to the chapter):

 Economics                                          Opportunity Costs                             Utility
 Scarcity                                               Incentives                                             Factors of Production                                          Trade-offs                                       Resources                         TINSTAAFL                                     Needs vs. wants                              
Production Possibilities Curve   
Land, labor, capital and entrepreneur