Ch 1 - Economics: The Core Issues

Question 0

capital

Answer 0

final goods produced for use in the production of other goods, e.g., equipment, structures

Question 1

scarcity

Answer 1

lack of enough resources to satisfy all desired uses of those resources

Question 2

factors of production

Answer 2

resource inputs used to produce goods and services

Question 3

entrepreneurship

Answer 3

the assembling of resources to produce new or improved products and technologies

Question 4

economics

Answer 4

the study of how best to allocate scarce resources among competing uses

Question 5

opportunity cost

Answer 5

the most desired goods or services that are forgone to obtain something else

Question 6

production possibilities

Answer 6

the alternative combinations of final goods and services that could be produced in a given time period with all available resources and technologies

Question 7

efficiency

Answer 7

maximum output of a good from the resources used in production

Question 8

economic growth

Answer 8

an increase in output (real GDP)’ an expansion of productions possibilities

Question 9

market mechanism

Answer 9

the use of market prices and sales to signal desired outputs (or resources allocations)

Question 10

laissez faire

Answer 10

the doctrine of “leave it alone”, of nonintervention by government in the market mechanism

Question 11

mixed economy

Answer 11

an economy that uses both market signals and government directives to allocate goods and resources

Question 12

market failure

Answer 12

an imperfection in the market mechanism that prevents optimal outcomes

Question 13

government failure

Answer 13

government intervention that fails to improve economic outcomes

Question 14

macroeconomics

Answer 14

the study of aggregate economic behavior, of the economy as a whole

Question 15

microeconomics

Answer 15

the study of individual behavior in the economy, of the components of the larger economy

Question 16

ceteris paribus

Answer 16

the assumption of nothing else changing

Question 17

3 core choices confronting every nation

Answer 17

what to produce, how to produce, for whom to produce

Question 18

4 types of production

Answer 18

land, labor, capital, entrepreneurship

Question 19

production possibilities curve (PPC)

Answer 19

various output combinations that could be produced in a given time period with available resources and technology

Question 20

Karl Marx

Answer 20

government should not only intervene but must own all means of production

Question 22

John Maynard Keynes

Answer 22

government should play an active but no all-inclusive role in managing the economy

Question 23

law of increasing opportunity cost

Answer 23

we must give up ever-increasing quantities of other goods an services in order to get more of a particular good