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Economics: Chapter 1 Quiz

Terms in this set (41)

Economics
the study of how individuals and societies make choices about ways to use scarce resources to fulfill their needs and wants
Labor
Human effort directed toward producing goods and services
Goods
Tangible objects that can satisfy people's wants or needs
Capital
Previously manufactured goods used to make other goods and services
Technology
Advance in knowledge leading to new and improved goods and services and better ways of producing them
everything that exists is limited
The need to make choices arises because
scarcity
The basic problem of economics is
something other than a basic survival need
To an economist, a want is
entrepreneurship
The four factors of production are the resources of land, labor, capital, and
natural resources
As an economic term, land refers to
Microeconomics
deals with behavior and decision making by small units such as individuals and firms
Macroeconomics
deals with the economy as a whole and decision making by large units such as governments.
Trade Off
Sacrificing one good or service to purchase or produce another
Opportunity cost
Value of the next best alternative given up for the alternative that was chosen
Production possibilities curve
Graph showing the maximum combinations of goods and services that can be produced from a fixed amount of resources in a given period of time.
Guns versus butter
Production possibilities example involving choices between military defense and civilian good
Revenue
Money that the government collects from citizens through taxes
Trade offs
All economic choices include
Exchanging money for goods
What trade off is involved when you buy an MP3 player?
Next best alternative
In a trade off, opportunity cost is the value of the
Production possibilities curve
Which of the following is a visual aid that helps a business determine how best to use it's resources?
More civilian goods
The amount of military goods given up in a year is the opportunity cost for producing
Using free time to study/do homework
What kinds of trade offs do you make as a student?
The ability to engage in your next highest valued alternative
What does an opportunity cost cause a person to lose?
Be aware of their trade offs and opportunity costs
What is important to know before a person makes a decision related to his or her available resources?
Economic growth, reduce our wants, use our existing resources wisely
What are the three options to deal with scarcity?
The best choice
What does a production possibilities curve NOT tell you?
Scarcity
Value is determined by
Their supply of economic uses that are tangible, scarce, useful, and transferable.
What makes a country developed?
Economy
The production and distribution of goods and services in a society
Economic model
A theory or simplified representation that helps explain and predict economic behavior in the real world
Hypothesis
An assumption involving two or more variables that must be tested for validity.
Laissez-Faire
Governmental "hands off" policy concerning business and consumer affairs
Values
The beliefs or characteristics that a person or group considers important
Define the problem
The first step in crating an economic model is to
Show the way people react to changes in the economy
Economic models are useful because they
Judgments depend on values
Why can't economic models judge whether policies are good or bad?
Personal beliefs influence how economists apply facts to theories
Different schools of economic thought exist because
Offer solutions to economic problems
Which of the following describes what economists do?
Line graph
What is the most common economic model?
Some factors remains constant
What do economic models assume?
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