Chapter 1-1st principles

Question 0

Objectives

Answer 0

The part of the economic problem that refers to the goals that economic agents try to achieve

Question 1

What is the economic problem?

Answer 1

A three-part problem consisting of objectives, alternatives, and constraints

Question 2

Alternatives

Answer 2

The part of the economic problem that refers to the necessity of making choices

Question 3

Constraints

Answer 3

The part of the economic problem that refers to the limitations that prevent economic agents from achieving their objectives

Question 4

Law of scarcity

Answer 4

The principle that resources are to sufficient to achieve all the objectives or goals of the economic problem

Question 5

Consumers

Answer 5

Economic agents who consume goods and services and who supply the primary factors of production–land, capital and land–to producers

Question 6

Factors of production

Answer 6

The resources or inputs that producers use to produce goods and services, consisting of labor, capital, land and material inputs

Question 7

Labor

Answer 7

A catch-all term referring to all the different kinds of skills and occupations found in the work force; one of the primary factors of production

Question 8

Entrepreneurs

Answer 8

Imaginative individuals who bring new ideas to the business world and who are willing to take the risks of starting new ventures or businesses

Question 9

Land

Answer 9

The property on which business firms build their factories and office buildings; includes the fertile soil, and natural resources contained within the land; one of the primary factors of production

Question 10

Capital

Answer 10

The plant and equipment required to produce goods and services; one of the primary factors of production

Question 11

Producers

Answer 11

Economic agents who produce goods and services by receiving factors of production from consumers and other producers

Question 12

Material inputs

Answer 12

Semi-finished products purchased by firms and used as a factor of production

Question 13

Utility

Answer 13

The value that a consumer derives from the consumption of goods and services

Question 14

Profit

Answer 14

The difference between the revenue obtained from selling goods and services and the cost of producing them

Question 15

Interdependence

Answer 15

The principle that economic decisions are interrelated such that the consequences of a decision always spread beyond the immediate objectives of the decision

Question 16

Opportunity cost

Answer 16

The economic meaning of cost; the value, in terms of the objectives, of the next best alternative

Question 17

Exchange

Answer 17

The trading of goods, services, and factors of production among the key players in the economy

Question 18

Economics

Answer 18

The study of the allocation of scarce resources through the process of exchange