ch 1: economics

Question 1

scarcity

Answer 1

idea that resources are limited, human needs are unlimited

Question 2

scarcity is not synonymous with shortage

Answer 2

money + time is scarcity

Question 3

5 foundations of economics

Answer 3

1. incentives
2. trade-offs
3. opportunity cost
4. marginal thinking
5. trade creates value

Question 4

incentives

Answer 4

factors that motivate effort
positive incentives encourage action
incentives direct or indirect

Question 5

unintended consequences

Answer 5

an unplanned result (usually unwanted and negative) of an incentive

Question 6

opportunity cost

Answer 6

quantities “what” or “how much” is being given up
it is the highest valued alternative

Question 7

marginal thinking

Answer 7

evaluating a course of action pursue opportunities to increase utility

Question 8

trade

Answer 8

Exchange of goods and services between two or more parties

Question 9

circular flow

Answer 9

shows how goods, services, and resources flow through the economy

Question 10

comparative advantage

Answer 10

Individual, business, or country can produce at a lower opportunity cost. leads to specialization