Notesale: Turn your study into money

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Student's Name_____________________________
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CHAPTER ONE: ECONOMICS AND CHOICES
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CORE OBJECTIVES
E
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2 Explain how consumers and producers confront the condition of scarcity, by making
choices that involve opportunity costs and tradeoffs
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1
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1
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E
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7 Compare and contrast how the various economic systems (traditional, market, command,
mixed) try to answer the questions: What to produce? How to produce it? And for whom to
produce?
E
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7 Compare and contrast how the various economic systems (traditional, market, command,
mixed) try to answer the questions: What to produce? How to produce it? And for whom to
produce?
E
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8 Describe how clearly defined and enforced property rights are essential to a market
economy
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Define the problem of scarcity
2
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Understand the concept of opportunity cost
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Define and explain an “Economic way of Thinking
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Use a PPF to solve simple economic trade-off problemss
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Do assignment 1A
Day 3 Correct homework
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The Economic Way of Thinking
A
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Main point: People make Choices_
2
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everything has a cost
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people choose for good reasons
c
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economic systems influence people‟s incentives
e
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people‟s choices influence the value of a good or service
g
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Choices made today influence what happens tomorrow
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Scarcity (and it‟s allocation): The Basic Economic problem
1
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Wants are +__Unlimited
3
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Opportunity costs____What you give up to get something
C
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The job of economics
2
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Positive and normative economics_____Positive economics is what the situation is
reality is but Normative is what should be happening_____
4
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Economic model: strengths and weaknesses__idea and accuracy

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D
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The PPCProduction possibilities Curve
2
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resources __All resources are fixed_
b
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only 2 goods
d
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Why the PPF/C is NOT a straight line____Some resources are better suited for one
good than other___
4
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shows scarcity _in a model_____
b
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measures/shows the EXACT __oppurtunity cost_
5
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Why People Choose: There's No Such Thing as a Free Lunch
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Choosing and Refusing
1
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"Economizing
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Marginal choosing__Doing more_____
B
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"realcost"___The cost of producting a product or service_______
2
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Opportunity cost in school___Mun and study time____
b
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Opportunity cost in government____Investment in health means less money
for schools and others
3
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Opportunity cost and law of diminishing marginal returns___beyond a certain
production level, productivity increases at a decreasing rate____
C
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"value"

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2
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Voluntary and involuntary trade
a
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involuntary trade____Where your forced to______
c
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The school board rejects a request to open its swimming pools free of cost to the public on
nights and weekends
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Lee refuses to spend time cleaning his room despite his parents‟ constant nagging
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California raises the fine for driving illegally in a freeway car-pool lane to over $250
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Which do you think were intended and which were unintended?
a
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b
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c
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For your Journal
Describe at least three economic choices you made last week-choices concerning your time,
money, or other resources
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Identifying Economic Concepts
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FindtheMissingLinks
Fill in the missing words
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You
might start a yard cleanup service, a car wash, or a grocery shopping and delivery service for people who
are house bound
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You choose
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List the resources you have and those you will need
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Which, if any, of your resources involve money?
2
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What are the risks in starting up your business?
4
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What will you have to do to obtain the resources that you will need?
6
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Students in a related but larger and more prosperous
business ask you to combine your business venture with theirs
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What would be the
opportunity cost of joining the larger business? What would be some of the benefits?
7
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Newspaper stories on the shortage have reported that business and industry lure math majors
away from the teaching profession by paying higher salaries
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1
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For a math graduate, what is the opportunity cost of choosing to teach? Of a career in computers?
3
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Revisiting the Myth: Suppose a college graduate decides to become a math teacher
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ApplyingEconomic Concepts Jena Crow, an artist, makes unique jewelry out of silver and precious
stones
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Describe the resources
Jena uses to make the jewelry
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DrawingConclusions Paul Sims runs The American Pie General Store
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Paul's supplier of jams and
preserves has decided to retire
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EvaluatingAlternatives An entrepreneur plans to start a restaurant that specializes in Jamaican food
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He has two alternatives: He can rent an
expensive site in a high-traffic district, or he can buy an inexpensive building in an out-of-the-way spot
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Choose one to describe in your journal
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Interpreting Graphs: Learning the Basics
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Learning the Basics
One factor that can affect grades is time spent watching TV
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1
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Is there an independent variable? Is there a dependent variable? Explain
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What if the graph above seemed to show no pattern whatsoever with points jumping all over the place?
4
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Choose one graph and
bring a copy of it to class
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Then identify the situation shown

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on the graph as relating to either macroeconomics or microeconomics and as being an example of either
positive economics or normative economics
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You have been
stranded on an island
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1
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As you develop it, consider these questions:
a
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How will you make the products?
c
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When you have finished your plan, review the results
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Was resource scarcity a problem? Why or why not?
b List the choices you made in creating the survival plan
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What helped you decide which choices would be most helpful?
d
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------------------------------------------------------Assignment 1C
-----------------------------------------------------ApplyinganEconomicWayofThinking
4
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a
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b
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c
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5
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a
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a graph showing the changing cost of production of one brand of shoes over the past five years
c
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Estimate about how much homework and
study time you would have to devote to that class to earn the full range of possible grades
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Graphing PPC(F): WhatAretheTrade-Offs?

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Production Possibilities
HDTVS
150
140
120
90
50
0
Video Games
0
10
20
30
40
50

1
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2
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What is the opportunity cost of increasing production of video games from 20
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000?
4
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Graph the PPFs for the following situation
1
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Here are the figures for
producing oil (in millions of barrels per day) or the new Wastararri (in whole cars)
Oil
cars

2
0

1
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9
3

6
4

0
4
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The new Wastararri dealer claims he can make 5 cars if the government simply gives him a big
loan
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The Wastararri producer has found a way to make TWICE as many cars per million barrels
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2
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The following are the figures per hour
of work
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MAS doubles its custodial staff
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Drawn the new PPF curve
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Two of the custodians quit go back to India
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A debate is raging about whether to preserve this land as wilderness or open it to
oil drilling
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1
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How much land could be designated as wilderness if no drilling were allowed?
3
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Tell whether each statement below is positive or normative
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If we want oil from this area, we have to be prepared to sacrifice some wilderness
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Driving up energy costs just to protect a few animals makes no sense
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Preserving the wilderness environment should be our highest priority
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Interpreting Assumptions For each assumption on which the production possibilities model is based,
explain why it does not correspond to the real world
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Only two things can be produced
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Technology is fixed
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Applyingeconomic Concepts Suppose the owners of a motorcycling manufacturing company are
thinking about entering the car production business (the situation, incidentally, with Honda and Suzuki)
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Resources are fixed
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All resources are fully employed
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Begin a journal entry with the following
words and then complete the thought: "My life would be a lot better if I had more
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It had all the right ingredients: a big-name star, advance publicity, and a
variety of dazzling marketing tie-ins
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Instead, the movie was
overshadowed that summer by Universal Studios' Jurassic Park
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What were some of the potential opportunity costs for Columbia Pictures going "all out" with
The Last Action Hero ?
2
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You have a free pass to see The Last Action Hero, but you would rather see Jurassic Park
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Use economic reasoning to account for some moviegoers seeing a movie ten times, while
others see it once or twice
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Analyzing Costs and Benefits Abdullah recently took a summer job working at a bank
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What were some of the costs and benefits of his decision
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Indicate which you would choose
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5
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Each new telemarketer will increase company
sales, but each also must be paid
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In the first column, list four alternatives; in the second column, list two potential costs for
each choice
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In the fourth column, explain
whether your choice worked out as you had anticipated
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Eating the first lemon pie was fun
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After Dan ate a chocolate mousse pie, his stomach was upset
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Dan's total utility for each pie consumed
was 6, 10, 12, 13
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At this point, had Dan received
yet ANOTHER pie, he would've probably paid not to consume it
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1
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On graph paper, plot Dan's total utility for each pie
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3
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Label it MU
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Why do the curves for total utility and marginal utility have different shapes?
5
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6
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Why do the two graphs share one point in common?
----------------------------------------Analyzing Decisions
How Do You Choose?
------------------------------------------Read the following scenario and then answer the questions that follow
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Students and teachers complain that there are twenty-five students in some
classes
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Ala'a Al Nefarious, a school board member, has proposed hiring more teachers and building a
new, bigger high school building
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Alia Al Mefista has suggested that Bayan should do what schools in the US have done--keep
school in session year-round
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All students would not attend all sessions, but teachers would
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Year-round schools have smaller
classes than other schools and do not allow students' skills to slide during long summer vacations
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Add Teachers and Build a New School:
Students and teachers could have summers free
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Some families and businesses say tuition is too high already and have threatened to
leave for another (but less famous) bilingual school if tuition rises again
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Keep School in Session Year-Round
This choice may increase student learning at very little additional cost
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Some parents will find vacations harder to
plan, and some students prefer an extended summer vacation
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3
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However, school
operating costs would not increase
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What is the reason for making a decision?
2
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What are your goals, or the results you want?
4
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5
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Decide which choices help you meet your goals
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6
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Include what goals are met by the decision and what you give up
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The real question is, How safe should highways be?
There have been many suggestions over the years that undoubtedly could increase safety, such as
Reduce the speed limit to 80 kilometers per hour
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Deduce the number of expressway entrances
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1
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What would be the opportunity cost for such safe highways?
3
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4
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He said the whole reason behind airbags is that some
drivers simply will not wear their belts; with the airbags, of course, they have "no choice
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What, then, is the cost to the average American driver of those who
simply do not wear their airbags?
5
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What might the opportunity cost be for students?
For teachers?For the community?
6
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When they began their journey, what was their
opportunity cost? What were their anticipated benefits?
7
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They would need to raise taxes, reduce spending, or do both
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Explain
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Identify your opportunity cost of going abroad for schooling
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They are adjustable so that they can play 78-, 45-, and 33-rpm records
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He has not sold any players
for some time and wonders about their value
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What's the value Of Nick's warehouse of record players?
2
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If Nick forced his little brother to buy a record player for $500, why has he or has he not created value?
4
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" If no one has bought or sold this land in 50 years, how will they
know the value of the base?
5
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What is a good measure of whether the arrangement between you and the company is a fair
trade?
UNIT REVIEW: UNIT ONE
A
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Be able to explain:
1
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Positive economics versus normative
3
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How scarcity relates to opportunity costs
5
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How incentives influence behavior
C
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A PPC/F
2
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How points inside and outside the PPF relate to a nations opportunity cost
4
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What a shift OF the curve the means
Unit Test: Sample Test
A
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Capitalism is an example of a(n) _____________________
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Faisal‟s insurance and bank business offer _______________
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Getting college credit is an _______ for taking an AP course
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Those 20000 square kilometers of beach front property are examples of _____
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Potato chips and computer chips are examples of ________________
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The _________ of taking this course is not taking French
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If your parents stop paying an allowance, this will force you to _____________
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“The poor seem to get nothing
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WORD CHOICES
capital (7)
economic model (12) economic system (3) economics (2)
economize (2)
entrepreneurship (7)
factors (of production) (6)goods (4)
incentive (3)
labor (7)
land (7)
macroeconomics (10)
microeconomics (10) normative economics (11opportunity cost (8)
positive economics

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production possibilities curve (PPC or PPF)

(14)

scarcity (6)

services (4)

B
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How is that even Bill Gates (world‟s richest man) must deal with scarcity? Explain
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When Dirty Harry said, “A man‟s got to know his limitations” was he making an economic statement?
C
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New manager Fazan Al Kazam wants to
increase production to 80 pens
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