Chapter 1 Terms

Question 1

The common sense science of how and why people, businesses, and governments make the choices that they do

Answer 1

Economics

Question 2

Having unlimited wants and thus never being satisfied

Answer 2

Insatiability

Question 3

Goods or service being finite or limited in quantity

Answer 3

Scarcity

Question 4

The value people place on a good or service

Answer 4

Economic cost

Question 5

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

Answer 5

Good

Question 6

Items that bear a positive economic cost

Answer 6

Economic goods

Question 7

Services that bear a positive economic cost

Answer 7

Economic services

Question 8

Items that bear a negative economic cost

Answer 8

Nuisance good

Question 9

Turning nuisance goods into economic goods

Answer 9

Recycling

Question 10

Items provided freely by God in nature

air and water

Answer 10

Free goods

Question 11

Services provided freely by God in nature

wind on a windmill, stream on a water wheel

Answer 11

Free services

Question 12

The riddle that asks which is more valuable, a handful of diamonds or a glass of water, solved by Carl Menger in 1871 when he proposed that value is not inherent in an object but rather is determined by the buyer

Answer 12

Diamond-water paradox

Question 13

Value ascribed to a good or service because of its nature

Answer 13

Intrinsic value

Question 14

the worth of a good or service as determined by its usefulness to the buyer

Answer 14

Subjective value

Question 15

Usefulness

Answer 15

Utility

Question 16

The satisfaction a person receives from a choice

Answer 16

Opportunity benefit

Question 17

The satisfaction one gives up or the regret one experiences for not choosing a desirable alternative

Answer 17

Opportunity cost

Question 18

An imaginary unit of satisfaction

Answer 18

Util

Question 19

The level of economic study that is concerned with choices made by individual units

Answer 19

Microeconomics

Question 20

The level of economic study that is concerned with large-scale economic choices and issues

Answer 20

Macroeconomics

Question 21

The approach to economic study involving the observation of economic choices and the prediction of economic events

Answer 21

Positive economics

Question 22

The approach to economic study involving value judgments about existing and proposed economic policies

Answer 22

Normative economics