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Unit 1 Exam Review Ch. 1 • What causes scarcity? • How do businesses rely on individuals in the factor and product markets? • How do individuals rely on businesses in the factor and product markets? • Using the Production Possibilities curve on the right, explain the following: – The meaning of the blue curved line – The meaning of both the A and X variable – The benefit and opportunity cost of movement on the curve from B to D – How can this business increase its production possibilities frontier curve so that it can produce at X? Ch. 2 • How do traditional economies discourage new ideas for improving the economic well-being of the people? • Explain the following quote: – “From each according to his means, to each according to his needs.” • Give an example and explain how two economic goals can conflict with each other. • Compare an advantage and a disadvantage of a command and market economy. • Compare an advantage and a disadvantage of a command and market economy. • Briefly explain how YOU believe an increase in the minimum wage would affect the circular flow of economic activity. Ch. 3 • Compare any business type to any food item. Choose three or four characteristics that they share and explain. • What is the difference between a horizontal and vertical merger? • Give two reasons businesses merge. • Why would a business want to become a conglomerate? • Why should members of a general partnership be concerned about the financial responsibility of their partners? • How do non-profits affect the circular flow of economic activity?
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