this is to help you in economics class. book used: Holt Economics isbn: 0-03-066336-9

1. Lesson 1.1, 1.2, 1.3

2. 1.1
 Simply put, economics is the study of the choices
that people make to satisfy their needs and wants.
 Economist: person who studies economics
 Microeconomics: study of choices made by
economic actors such as households, companies,
and individual markets.
 Macroeconomics: studies the behavior of entire
economies.
 Consumers: people who decide to buy things
 Producers: People who make things
 Goods: physical objects that can be purchased
 Services: actions or activities performed for a fee.

3. 1.1
 Factors of production: resources that can be used
to produce goods
 Natural resources: nature helps to produce goods
and provide services
 Human resources: when humans put in effort
during production
 Capital resources: the manufactured materials
used to create products.
 Capital goods: buildings, structures, machinery,
and tools used in the production.
 Entrepreneurship: organizational abilities mixed
with risk taking involved in starting a new business
or selling a new product.

4. 1.1
 To develop a new mix of the other factors of
production, creating something of value.
 Entrepreneur – a person who attempts to
start a new business or produce a new
product.
 Ex. Michael Dell, helped make computers
more affordable by starting Dell, which sold
their computers by phone or online. They are
now the world’s top direct seller of computers.

5. 1.2
 Itforces people to make decisions about
how to use resources effectively.
 Scarcity: the combination of limited
resources and unlimited wants.

6. 1.2
 What to produce: sometimes the producer
must choose which need is more urgent.
 How to produce: managing your options of
ways of production, people or machine?
 For whom to produce: the way the product
is built depends on who is using it.
 Allocate: another word for distribute

7. 1.2
 To determine if resources are being used
wisely.
 Productivity: the level of output that results
from a given level of input.
 Efficiency: use of the smallest amount of
resources to make the biggest amount of
output.
 Division of labor: assigning a small amount
of tasks to each worker.
 Specialization: the focus on one activity

8.  Sacrifice is an important element of
economic choice because once you use
one resource to produce, you can’t use
that one resource again. (unless its
renewable)
 Trade-off: another term for sacrifice
 Opportunity cost: the value of the next best
alternative that is given up to obtain the
preferred item.

9.  1. the amount of available resources and
technology will NOT change during the
period being studied.
 2. all of the natural, human and capital
resources are being used in the most
efficient manner possible.
 Production possibilities curve: shows all of
the possible combinations of two goods or
services that can be produced within a
stated time period.

10.  Advances in technology
 Resource availability
 If the curve moves right, technology
improvements have been made or there
are more resources available 
 Curve moves left, less resources 