Lesson 1 Vocab

Question 1

Economics

Answer 1

The study of how people choose to use their limited resources to satisfy their unlimited needs.

Question 2

Economy

Answer 2

A system used to manage limited resources for the production, distribution, and consumption of goods and services.

Question 3

Positive Economics

Answer 3

The branch of economics that uses objective analysis to find out how the world works. The goal is to describe how things are.

Question 4

Normative Economics

Answer 4

The branch of economics that applies value judgments to data in order to recommend actions or policies. The goal is to advise how things ought to be done.

Question 5

Scarcity

Answer 5

The condition that results because people have limited resources but unlimited wants.

Question 6

Tradeoff

Answer 6

The exchange of one benefit or advantage for another that is thought to be better.

Question 7

Cost-Benefit Analysis

Answer 7

A way to compare the costs of an action with the benefits of that action. If benefits exceed costs, then the action is worth taking.

Question 8

Incentive

Answer 8

Any factor that encourages or motivates a person to do something. Prices, taxes, and laws create incentives that influence how people behave.