Chapter 1

Question 1

The condition of having unlimited wants and thus never being satisfied

Answer 1

Insatiability

Question 2

The condition of a good or service being finite or limited in quantity

Answer 2

Scarcity

Question 3

Being satisfied with what God has provided

Answer 3

Contentment

Question 4

Oversees the profitable use of his master’s resources, demonstrating wisdom and, most importantly, faithfulness

Answer 4

Steward/Stewardship

Question 5

What is economics?

Answer 5

Common sense science of how and why people and businesses make the choices they do

Question 6

What two contradictory ideas result in the necessity of choice?
Explain and define each.

Answer 6

1) instability: everyone has unlimited wants

2) scarcity: everything is finite or limited

Question 7

What character quality is essential for the Christian to have victory over insatiability? Explain.

Answer 7

Contentment
Being content means that you are satisfied with what God has provided and frees you from the struggle of instability vs. scarcity

Question 8

Value people place on a good or service, and that value, in turn, helps to determine the price of the good or service

Answer 8

Economic cost

Question 9

Any tangible (physical) thing that has a measurable life span.

Answer 9

Good

Question 10

Intangible items

Answer 10

Services

Question 11

Value ascribed to a good or service be- cause of its nature

Answer 11

Intrinsic value

Question 12

The satisfaction you receive from the choice you make.

Answer 12

Opportunity benefit

Question 13

The satisfaction you give up or the regret you experience for not choosing differently.

Answer 13

Opportunity cost

Question 14

What is the difference between an economic cost and an opportunity cost?

Answer 14

Economic cost: economic cost that people place on a good or service that is reflected by its price
Opportunity cost: the satisfaction the person gives up or the regret felt by not choosing differently

Question 15

What is the difference between intrinsic value and subjective value?

Answer 15

Intrinsic: the value a person believes a product to have because of its nature, scarcity, and amount of labor needed to produce it
Subjective: the value of a product based solely on the opinion of the buyer

Question 16

deals with choices made by individual units

Answer 16

Microeconomics

Question 17

examines large-scale economic choices and issues

Answer 17

Macroeconomics

Question 18

The approach of observing economic choices and predicting economic events

Answer 18

Positive economics

Question 19

making value judgments about existing or proposed economic policies

Answer 19

Normative economics

Question 20

What is the difference between microeconomics and macroeco- nomics? Give examples of each.

Answer 20

Micro: deals with choices made by individual units
-individual households
Macro: deals with large scale economic choices
-what causes a banks interest rate to rise and fall

Question 21

What is the difference between positive and normative economics? Give examples.

Answer 21

Positive: Entails observing economic choices and predicting economic events
-studying reports to and making a prediction
Normative: entails making value judgments about existing or proposed economic policies
-judging policies as good or bad

Question 22

What idea did Menger propose that radically changed the way economists should determine an object’s value?

Answer 22

Proposed that an individual’s decision is based on personal utility
So the consumer decides

Question 23

Common-sense science of how and why people, businesses, and governments make the choices they do

Answer 23

Economics