Chapter 1

Question 1

What is the economic problem

Answer 1

Human wants exceed resources available to satisfy them.

Question 2

Economics

Answer 2

The science of scarcity since it concerns the inequality of wants and resources.

Question 3

Utility

Answer 3

Is the economists term for satisfaction or happiness.

Question 4

Disutility

Answer 4

Means unhappiness or dissatisfaction

Question 5

Good

Answer 5

Something that brings utility

Question 6

Economic good

Answer 6

Is so scarce someone will pay for it.

Question 7

Bad

Answer 7

Brings disutility

Question 8

Economic bad

Answer 8

Is so plentiful we are willing to pay to remove it.

Question 9

4 resources or factors of production

Answer 9

Natural resources
Capital
Labor
Entrepreneur ship

Question 10

Natural resources

Answer 10

Or land are the gifts of nature

Question 11

Capital

Answer 11

Human made goods used to make other goods

Question 12

Labor

Answer 12

Human work.

Question 13

Entrepreneurship

Answer 13

Process f bringing together the other factors to produce goods.

Question 14

What is the goal of business

Answer 14

To maximize profits

Question 15

What is the goal of a person

Answer 15

To maximize their utility

Question 16

Opportunity cost

Answer 16

Is what we give when we make a choice.
It is explicit cost plus implicit cost, where explicit costs are paid in money and implicit costs are non money factors such as time.

Question 17

Globalization

Answer 17

Is the partial integration of the economies of different countries.

Question 18

What do choices require us to consider

Answer 18

Both opportunity costs and benefits.

Question 19

What do the best choices have

Answer 19

Highest benefits relative to opportunity costs.

Question 20

What does science rely on

Answer 20

Scientific method which starts with observation of the world , which are explained by hypothesis.
Hypothesis must be tested before conclusion can be drawn.

Question 21

What scientists believe about theory

Answer 21

Theory can be disproved, but never completely proven.

Question 22

Ceteris paribus is a phrase meaning

Answer 22

Everything else held constant.

Question 23

In economics, when we change the value of one variable, we must

Answer 23

Hold all variables constant to isolate the effect of the change.

Question 24

Why economists cannot generally do science through experiments

Answer 24

As they must use mathematical and statistical models to explain.

Question 25

Model

Answer 25

Is a simplification of a part of the world.

Question 26

Microeconomics

Answer 26

Considers the individual person, single business or government

Question 27

Macro economics

Answer 27

Is concerned about the entire economy, total income and overall employment.

Question 28

Scarcity

Answer 28

-means that resources are always scarce relative to wants.

Question 29

Implicit cost

Answer 29

-non money costs.

Question 30

Explicit costs

Answer 30

-money related

Question 31

Positive theories

Answer 31

-that is not to be driven by our personal beliefs, but by data , analysis and observations .
Judgment free
Starts with a question

Question 32

Normative theories

Answer 32

-contain value judgment
Starts with an assumption
In here the hypothesis is not testable in a scientific way.