Chapter 1 - Marginal Benefit vs Marginal Cost

Question 1

Good

Answer 1

 Anything from which individuals receive utility or satisfaction.

Question 2

Utility

Answer 2

The satisfaction one receives from a good.

Question 3

Bad

Answer 3

Anything from which individuals receive disutility or dissatisfaction.

Question 4

Disutility

Answer 4

The dissatisfaction one receives from a bad.

Question 5

Land

Answer 5

All natural resources, such as minerals, forests, water, and unimproved land.

Question 6

Labor

Answer 6

The work brought about by the physical and mental talents that people contribute to the production process.

Question 7

Capital

Answer 7

Produce goods, such as factories, machinery, tools, computers, and buildings that can be used as inputs for further production.

Question 8

Entrepreneurship

Answer 8

The talent that some people have for organizing the resources of land, labor, and capital to produce goods, seek new business opportunities, and develop new ways of doing things.

Question 9

Scarcity

Answer 9

The condition in which I wants are greater than a limited resources available to satisfy those ones.

Question 10

Economics

Answer 10

The science of scarcity; the science of how individuals and societies deal with the fact that wants a greater than the limited resources available to satisfy those wants.

Question 11

Rationing device

Answer 11

A means for deciding who gets what available resources and goods.

Question 12

Marginal benefits

Answer 12

Additional benefits; the benefits connected with consuming an additional unit of a good or undertaking one more unit of an activity.

Question 13

Marginal costs

Answer 13

Additional costs; the cost connected with consuming an additional unit of a good or undertaking one more unit of an activity.

Question 14

Decisions at the margin

Answer 14

Decision making characterized by weighing the additional (marginal) benefits of a change against the additional (marginal) costs of a change with respect to current conditions.

Question 15

Efficiency

Answer 15

Exists when marginal benefits equal marginal costs.

Question 16

Incentive

Answer 16

Something that encourages or motivated person to undertake an action.

Question 17

Exchange (Trade)

Answer 17

The giving up of one thing for something else.

Question 18

Ceteris Paribus

Answer 18

A Latin term meeting all other things constant or nothing else changes.

Question 19

Theory

Answer 19

An abstract representation of the real world designed with the intent to better understand it.

Question 20

Abstract

Answer 20

The process (used in building a theory) of focusing on a limited number of variables to explain or predict an event.

Question 21

Positive economics

Answer 21

The study of what is in economics.

Question 22

Normative economics

Answer 22

The study of what should be in economics.

Question 23

Micro economics

Answer 23

The branch of economics that deals with human behavior and choices as they relate to relatively small units: an individual, a firm, and industry, a single market.

Question 24

Macro economics

Answer 24

The branch of economics that deals with human behavior and choices as they relate to highly aggregate markets (e.g., the market for goods and services) or the entire economy.