Chapter 1 - Limits, Alternatives, and Choices

Question 0

Economic Perspective

Answer 0

A viewpoint that envisions individuals and institutions make rational decisions by comparing the marginal benefits and marginal costs associated with their actions.

Question 1

Economics

Answer 1

The social science concerned with how individuals, institutions, and society make optimal choice is under conditions of scarcity.

Question 2

Opportunity Costs

Answer 2

The amounts of other products that must be for gone or sacrifice to produce a unit of a product.

Question 3

Utility

Answer 3

The satisfaction of person gets from consuming a good or service.

Question 4

Wage

Answer 4

The price paid for the users services of labor per unit of time (per hour, per day, and so on).

Question 5

Profit

Answer 5

The return to the resource entrepreneurial ability; total revenue minus total cost.

Question 6

Marginal Analysis

Answer 6

The comparison of marginal benefits and marginal costs, usually for decision-making.

Question 7

Marginal Benefit

Answer 7

The additional benefit of consuming one more unit of some service are good; the change in total benefit one one more unit is consumed.

Question 8

Marginal Cost

Answer 8

The additional cost of producing one more unit of output; equal to the change in total cost divided by the change in output and in the short run to changing total variable cost divided by the change in output.

Question 9

Scientific Method

Answer 9

The systematic pursuit of knowledge through formulating a problem, collecting data, and formulating and testing hypotheses to obtain theories, principles, and laws.

Question 10

Economic Law

Answer 10

And economic principle that has been tested and retested and have stood the test of time.

Question 11

Economic principle

Answer 11

A statement about economic behavior or the economy going to Nemos prediction of the probable effects of certain actions.

Question 12

Generalization

Answer 12

Statement of the nature of the relation between two or more sets of facts.

Question 13

Price

Answer 13

The amount of money needed to buy a particular good, service, resource.

Question 14

Other things equal assumption

Answer 14

The assumption that factors other than those being considerate are held constant.

Question 15

Economic model

Answer 15

A simplified picture of economic reality; an abstract generalization.

Question 16

Microeconomics

Answer 16

The part of economics concern with such individual units as industries, firms, and households.

Question 17

Macroeconomics

Answer 17

The part of economics concerned with the economy as a whole.

Question 18

Aggregate

Answer 18

A collection of specific economic units treated as if they were one unit.

Question 19

Positive economics

Answer 19

The analysis of facts to establish cause and effect relationships.

Question 20

Economic policy

Answer 20

A course of action intended to correct or avoid a problem.

Question 21

Normative economics

Answer 21

The part of economics involving value judgments about what the economy should be like.

Question 22

Economic problem

Answer 22

The need to make choices because societies material wants for goods and services are unlimited but the resources available to satisfy these wants are limited.

Question 23

Unlimited wants

Answer 23

The insatiable desire of consumers for goods and services that will give them satisfaction or utility.

Question 24

Budget line

Answer 24

A schedule or curve that shows various combinations of two products to consumers can purchase with a specific money income.

Question 25

Trade-off

Answer 25

The sacrifice of summer all of one economical, good, our service to achieve some other goal, good, or service.

Question 26

Economic resources

Answer 26

The land, labor, capital, and entrepreneurial ability that are used in the production of goods and services.

Question 27

Land

Answer 27

Natural resources used to produce goods and services.

Question 28

Labor

Answer 28

The physical and mental tones of individuals used in producing goods and services.

Question 29

Capital

Answer 29

Human made resources for example: buildings, machinery and equipment, used to produce goods and services.

Question 30

Money capital

Answer 30

Money available to purchase capital.

Question 31

Consumer goods

Answer 31

Products and services that satisfy human wants directly.

Question 32

Capital goods

Answer 32

Good satisfy human wants indirectly by eating the production of consumer goods.

Question 33

Investment

Answer 33

Spending for the production an accumulation of capital.

Question 34

Entrepreneurial ability

Answer 34

The human talents to combine the other resources to produce a product, make nonroutine decisions, innovate, and bear risks.

Question 35

Factors of production

Answer 35

Economic resources: land, Labor, capital, and entrepreneurial ability

Question 36

Scarce resources

Answer 36

The limited quantities of land, capital, labor, and entrepreneurial ability there never sufficient to satisfy the virtually unlimited material wants of humans.

Question 37

Technology

Answer 37

The body of knowledge and techniques that can be used to produce goods and services from economic resources.

Question 38

Production possibilities curve

Answer 38

A curve showing the different combinations of goods or services that can be produced in a full employment, full production economy for the available supplies of resources and technology are fixed.

Question 39

Full employment

Answer 39

Use of all available resources to produce want to satisfying goods and services.

Question 40

Law of increasing opportunity costs

Answer 40

As the production of a good increases, the opportunity cost of producing an additional unit rises.

Question 41

Economic growth

Answer 41

An outward shift in the production possibilities curve the results from an increase in factor supplies or quality or an improvement in technology.

Question 42

Fallacy of composition

Answer 42

The false notion that what is true for the individual or part is necessarily true for the group or whole.