1. Name ________________ Period 3 Points: ______ / 100 pointsDue Date: February 12, 2010 This is a Required Assignment. No Late Work Accepted! Unit 1: Chapters 1, 2 & 3 and Chapter 1 Appendix (Graphs and Their Meaning) Chapter 1: The Nature and Method of Economics, pp. 3 - 13 Terms and Concepts Term/ConceptDefinitionEconomicsEconomic PerspectiveMarginal AnalysisOther-things-equal assumption (ceteris paribus)TradeoffsMacroeconomicsMicroeconomicsPositive EconomicsNormative EconomicsScarcityOpportunity Costs Short Answer Questions: 1. List and Define the eight (8) Economic Goals mentioned on page 9. 2. Give an example of Normative Economics. 3. Give an example of Positive Economics. Chapter 1: Appendix – Graphs and Their Meaning, pp. 15 - 21 1. What is meant by a “direct relationship”? 2. What is meant by an “inverse relationship”? 3. Describe “independent variable”. 4. Describe a “dependent variable”. 5. How is the slope of a line determined? 6. What is the equation for a straight line? 7. Draw a graph showing a line with a slope that is infinite. 8. Draw a graph showing a line with a slope that is zero (0). Chapter 2: The Economizing Problem, pp. 22 - 39 Terms and Concepts Term/ConceptDefinitionUtilityEconomics ResourcesLandLaborCapitalInvestmentEntrepreneurial AbilityFactors of ProductionFull EmploymentFull ProductionProductive EfficiencyAllocative EfficiencyConsumer GoodsCapital GoodsProduction Possibilities CurveLaw of Increasing Opportunity CostsMarket SystemCapitalismLaissez-faireCommand SystemResource MarketProduct MarketCircular Flow Model Short Answer Questions: 1. What is meant by the phrase “society’s economic wants”? 2. What is meant by the phrase “economic resources”? 3. Why are economic resources considered to be limited or scarce? 4. Explain the four (4) assumptions that are made about the Production possibilities Model (pg. 25). 5. Explain the Production Possibilities Curve (pp. 26 – 27). 6. Why are economic resources not completely adaptable to alternative uses? Give an example. 7. Examine Figure 2.3 on page 29. A. Explain point “U”. B. Describe three possible routes back to full-employment and least-cost production. 8. Describe how International Trade can change the economic model shown in Figure 2.3. 9. Complete the Circular Flow Diagram (see pg. 35). Chapter 3: Individual Markets – Demand and Supply, pp. 40 – 58 Terms and Concepts Terms/ConceptsDefinitionsMarketDemandDemand ScheduleLaw of DemandDiminishing Marginal UtilityIncome EffectSubstitution EffectDemand CurveDeterminants of DemandNormal GoodsInferior GoodsSubstitute GoodsComplementary GoodsChange in DemandChange in Quantity DemandedSupplySupply ScheduleLaw of SupplySupply CurveDeterminants of SupplyChange in SupplyChange in Quantity SuppliedSurplusShortageEquilibrium PriceEquilibrium QuantityRationing Function of Price Short Answer Questions: 1. Why does a demand curve slope downward? 2. Distinguish between a change in demand and a change in the quantity demanded. 3. Why does the supply curve slope upward? 4. Distinguish between a change in supply and a change in the quantity supplied. 5. Graph the following data, and then answer the questions. Be sure to Label the Graph. (12 points) Thousands of Bushels of Wheat DemandedPrice per Bushel of WheatThousands of Bushels of Wheat SuppliedSurplus (+)orShortage (-)85$3.407280$3.707375$4.007570$4.307765$4.607960$4.9081 6. What is the Equilibrium Price? _________ Equilibrium Quantity? ________ 7. Label equilibrium price P and equilibrium quantity Q. 8. Now suppose that the government establishes a ceiling (maximum legal) price of, say, $3.70 for wheat. Explain carefully the effects of this ceiling price. Demonstrate your answer graphically. What might prompt the government to establish a ceiling price? Total Demand & Total Supply of Wheat per month in the Kansas City Grain Market