1.1 What is Economics and Why is it Important?

Question 1

_____ is the study of how humans make decisions in the face of scarcity.

Answer 1

Economics

Question 2

____ means that human wants for goods and services and resources exceed what is available.

Answer 2

Scarcity

Question 3

Why is data important in economics?

Answer 3

Because it describes and measures the issues and problems that economics seeks to understand.

Question 4

_____ means that the way one produces a good or service is divided into a number of tasks that different workers perform, instead of all the tasks being done by the same person.

Answer 4

Division of Labor

Question 5

Why does the division of labor increase production?

Answer 5

Workers who can focus on their preferences and talents, learn to do their specialized jobs better, and work in larger organizations is that a society as whole can produce and consume far more than if each person tried to produce all of his or her own goods and services.

Question 6

______ allows workers to focus on the parts of the production process where they have an advantage.

Answer 6

Specialization

Question 7

_____ means that for many goods, as the level of production increases, the average cost of the individual unit decreases.

Answer 7

Economies of Scale

Question 8

What is also necessary for specialization to make sense?

Answer 8

Trade

Question 9

Name 4 reasons to study economics…

Answer 9

1. To provide answers on how to solve problems
2. To make informed decisions as a good citizen
3. To make one a well rounded thinker in economic issues, to make sense of economic arguments
4. To provide many options instead of one solution