For economists, the word "utility" means:
The want-satisfying power of a good or service; the satisfaction or pleasure a consumer obtains from the consumption of a good or service.
Economics may best be defined as the:
A social science concerned with making optimal choices under conditions of scarcity
Which of the following most closely relates to the idea of opportunity costs?
The amount of other products that must be forgone or sacrificed to produced a unit of a product
The process by which economists test hypotheses against facts to develop theories, principles, and models is called:
Macroeconomics approaches the study of economics from the viewpoint of
Examines the economy as a whole or its basic subdivisions or aggregate.
The alternative combinations of two goods which a consumer can purchase with a given money income is shown by
A budget line
A production possibilities curve shows:
Displays the difference combination of goods and services that society can produce in a fully employed economy, assuming a fixed available ability of supplies of resources and fixed technology
An economic system
Is a Particular set of institutional arrangements and coordinating mechanism used to respond to the economizing problem
Economic systems differ according to which two main characteristics
Who owns the factor of production and what method is used to motivate, coordinate, and direct economic activity
The "coincidence of wants" problem associated with barter refers to the fact that
For exchange to occur each seller must have a product that some buyer wants
Which of the following is one of the Five Fundamental Questions
What goods and services will be produced
In a competitive market economy firms select the least-cost production technique because
To do so will maximize the firms profit.
The market system's answer to the fundamental question "What will be produced?" is essentially
Goods and services that create a profit
The market system's answer to the fundamental question "How will the goods and services be produced?" is essentially
Minimize the cost per unit by using the most efficient techniques which are technology, and price of the necessary resources.
The market system's answer to the fundamental question "Who will get the goods and services?" is essentially
Consumers with he ability and willingness to pay will get the product
The market system's answer to the fundamental question "How will the system accommodate change?" is essentially
Through the guiding function of prices and the incentive function of profits.
The market system's answer to the fundamental question "How will the system promote progress?" is essentially
Through the profit potential that encourages development of new technology
"Consumer sovereignty" means that
Both businesses and resource suppliers are subject to the wants of consumers. Through their dollar votes, consumers decide on the composition of output
Which of the following best describes the invisible-hand concept?
The desires of resource suppliers and producers to further their own self-interest will automatically further the public interest
In terms of the circular flow diagram, businesses obtain revenue through the _____ market and make expenditures in the _____ market.
The law of demand states that, other things equal
As price falls, the quantity demanded rises, and as the price rises, the quantity demanded falls
Graphically, the market demand curve is:
Its downward slope reflects the law of demand-people buy more of a product service, or resource as its price falls
If two goods are complements
One is used together with another good. If the price of the complement goes up, the demand for the related good will decline.
If the demand for steak (a normal good) shifts to the left, the most likely reason is that:
The price has increased
The law of supply indicates that, other things equal
As the price rises, the quantity supplied rises and as the price falls, the quantity supplied falls.