Chap 1 & 2 Vocab (Quiz 1)

Question 1

Economics

Answer 1

Study of decision making when our wants are greater than our resources.

Question 2

Opportunity Cost

Answer 2

What must be given up to attain something that is desired

Question 3

Model

Answer 3

Simpler version of reality that can be used to understand how parts of the economy function

Question 4

Budget Constraint

Answer 4

All possible consumption choices, given your income and prices of goods

Question 5

Scarcity

Answer 5

When human wants for goods and services exceed the available supply

Question 6

Macroeconomics

Answer 6

Branch of Econ that focuses on broad issues such as growth, unemployment, inflation, and trade balance

Question 7

Microeconomics

Answer 7

Branch of economics that focuses on action of particular agents within the economy, like house holds, workers, and business firms

Question 8

Command Economy

Answer 8

An economy where economic decisions are passed down from government authority and where the government owns the resources

Question 9

Market

Answer 9

Interaction between potential buyers and sellers; a combination of supply and demand

Question 10

Market Economy

Answer 10

An economy where economic decisions are decentralized, private individuals own resources, and businesses supply good and services based on demand

Question 11

Private Enterprises

Answer 11

System where private individuals or groups of private individuals own and operate the means of production

Question 12

Traditional Economy

Answer 12

Tropically an agricultural economy where things are done the same as they have always been done

Question 13

Underground Economy

Answer 13

A market where the buyers and sellers make transactions in violation of one or more government regulations

Question 14

Production Possibilities Frontier (PPF)

Answer 14

A diagram that shows the productively efficient combinations of two products that an economy can produce given the resources it has available