Basic Economic Key Terms

1) Explain the basic assumption of economics with respect to rational self-interest. Describe two detailed real-life examples applying the assumption. (3 points)

2) Explain the relationship between scarcity, choices, and trade-offs. Describe two detailed real-life examples applying the terms. (5 points)

3) Explain the difference between the three terms: price, production cost, and opportunity cost. Describe two detailed real-life examples applying the terms. (5 points)

4) Explain the difference between the following terms. You must include definitions for both terms and use examples to support your analysis: (12 points)

i. Good and Services ii. Consumer Goods and Capital Goods

iii. Normative and Positive Economics

iv. Explicit and Implicit Costs

5)Describe in detail each of the listed factors of production, provide at least two examples of each resource, and explain how each example may be used to create goods/services. (15 points)

Land

Labor

Human Capital

Physical Capital

Entrepreneurship