chapter 1

Question 1

the study of how people manage their resources to meet their needs and enhance their well-being

Answer 1

economics

Question 2

a term used to refer broadly to a good quality of life

Answer 2

well-being

Question 3

questions about how things are

Answer 3

positive questions

Question 4

questions about how things should be

Answer 4

normative questions

Question 5

a goal that is desirable because its achievement will bring you closer to your final goal(s)

Answer 5

intermediate goal

Question 6

a goal that requires no further justification; it is an end in itself

Answer 6

final goal

Question 7

harmful side effects, or unintended consequences, of economic activity that affect those who are not directly involved in the activity

Answer 7

negative externalities

Question 8

beneficial side effects, or unintended consequences, of economic activity that accrue to those who are not among the economic actors directly involved in the activity

Answer 8

positive externalities

Question 9

the market value of all final goods and services produced within a country’s borders over a specific time period, normally one year

Answer 9

gross domestic product (GDP)

Question 10

the use of resources, or inputs, such that they yield the highest possible value of output or the production of a given output using the lowest possible value of inputs

Answer 10

economic efficiency

Question 11

a measure of welfare based on survey questions asking people about their own degree of life satisfaction

Answer 11

subjective well-being (SWB)

Question 12

preserving or improving the resources that contribute to the enhancement of well-being, including natural, manufactured, human, and social resources

Answer 12

resource management

Question 13

the conversion of resources into goods and services

Answer 13

production

Question 14

the sharing of products and resources among people

Answer 14

distribution

Question 15

the trading of one thing for something else

Answer 15

exchange

Question 16

the giving of something, with nothing specific expected into return

Answer 16

transfer

Question 17

the final use of a good or service

Answer 17

consumption

Question 18

the concept that resources are not sufficient to allow all goals to be accomplished at once

Answer 18

scarcity

Question 19

a curve showing the maximum amounts of two outputs that society could produce from given resources, over a given period

Answer 19

production-possibilities frontier (PPF)

Question 20

the value of the best alternative that is forgone when a choice is made

Answer 20

opportunity cost

Question 21

the development of new methods of converting inputs (resources) into outputs (products or services)

Answer 21

technological progress

Question 22

the subfield of economics that focuses on activities that take place within and among the major economic organizations of a society

Answer 22

microeconomics

Question 23

the subfield of economics that focuses on the economy as a whole

Answer 23

macroeconomics

Question 24

an analytical tool that highlights some aspects of reality while ignoring others

Answer 24

model

Question 25

a graphical representation of the traditional view of an economy consisting of households and firms engaging in exchange

Answer 25

circular flow diagram

Question 26

markets for the service of land, labor, and capital

Answer 26

factor markets

Question 27

markets for newly produced goods and services

Answer 27

product markets

Question 28

households, families, and informal community groups

Answer 28

core sphere

Question 29

firms that produce goods and services for profitable sale

Answer 29

business sphere

Question 30

governments as well as other organizations that seek to enhance well-being without making a profit

Answer 30

public purpose sphere