Unit Eight Study Guide: Economics Basics

Scarcity is

• what is given up when a choice is made

• type of resource that is a person doing work

• the inability to satisfy all wants at the same time - resources and goods limited

• the use of goods and services

Label the example correctly: The process of buying and eating ice cream.

• Consumption

• Production

Label each example correctly: The process of creating an ice cream stand business: building the stand, gathering resources such as milk and sugar, then making ice cream.

• Consumption

• Production

Underline what the opportunity cost is in this situation: Melanie wants to attend her friend’s basketball game. However, if she does this she will miss out on time with her cousins who are visiting from out of town.

• Attending the basketball game

• Missing out on time with her cousins

• Both attending the game and missing time with cousins

• Neither attending the game nor missing time with cousins

How would you know what the equilibrium price is looking at this table?

• Supply and Demand are the same at this price.

• Supply is greater than Demand at this price.

• Demand is greater than Supply at this price.

• There is no relationship between equilibrium and Demand at this price.

What price in the table has a surplus?

• $8.

• $10.

• $12.

• $14.

What price in the table has a shortage?

• $2.

• $3.

• $4.

• $5.

The red line represents ...

• The supply

• The equilibrium price

• The demand

• The surplus or shortage

Law of Supply: As the price goes UP, the quantity supplied will go UP. As the price goes down, the quantity supplied will go down.

• What is the Law of Supply?

• What happens to quantity supplied when price goes down?

• What is the relationship between price and demand?

• What is the Law of Demand?

Law of Demand: As the price goes UP, the quantity demanded will go down. As the price goes down, the quantity demanded will go UP.

• What is the Law of Demand?

• What is the Law of Supply?

• What is the Law of Gravity?

• What is the Law of Diminishing Returns?