unit 1

Question 1

Microeconomics

Answer 1

focuses on individual decision-making units and how they interact

Question 2

Macroeconomics

Answer 2

explores the economy as a whole

Question 3

Scarcity

Answer 3

the fixed amount of goods or services available

Question 4

Traditional economy

Answer 4

an economic system in which traditions, customs, and beliefs help shape the goods and services the economy produces, as well as the rule and manner of their distribution also referred to as a subsistence economy, a traditional economy is defined by bartering and trading

Question 5

Command economy

Answer 5

an economic system in which the means of production are publicly owned and economic activity is directed by a central government or portion of the government

Question 6

Market economy

Answer 6

an economic system in which the forces of supply and demand determine what goods and services are produced

Question 7

Mixed economy

Answer 7

an economy which practiced characteristics of both command and market economies; supply and demand largely influence the economy, but there is government intervention to meet certain economic goals

Question 8

Opportunity cost

Answer 8

the cost of choosing; what you give up by choosing one option

Question 9

Goods

Answer 9

objects that can fulfill human wants/needs, provide utility

Question 10

Services

Answer 10

economic activity that is intangible; provides utility, but cannot be stored

Question 11

Endowment

Answer 11

natural and human resources from which all goods and services must be produced

Question 12

finite

Answer 12

but not fixed (scarcity)

Question 13

Utility

Answer 13

satisfaction; economists assume maximizing this drives individual choice; measured in utils

Question 14

Profit motive

Answer 14

the tendency of people to engage in activities that will lead to monetary gain

Question 15

Consumer sovereignty

Answer 15

the economic power of the individual in a free market

Question 16

Government regulation

Answer 16

requirements the government places on private firms and individuals to achieve the government’s goals

Question 17

Social & economic goals

Answer 17

Freedom
Security
Equity
Growth
Efficiency
Stability

Question 18

Marginal utility

Answer 18

additional increment of utility associated with consuming one more unit of a good or service

Question 19

Margin

Answer 19

in a succession of units, the specific unit you are focusing on

Question 20

Total utility

Answer 20

the total satisfaction derived from consuming a specific quantity of a good or service; the total of marginal utilities for all individual units consumed

Question 21

Satiate

Answer 21

Satisfy

Question 22

Initial decision

Answer 22

over-simplified decision-making process based on utility (consume until marginal utility =0)

Question 23

Bliss point

Answer 23

maximization of utility

Question 24

Marginal analysis

Answer 24

evaluating the impact of one additional unit

Question 25

Util

Answer 25

a measure of utility (this is an abstract concept)

Question 26

Diminishing marginal productivity

Answer 26

initially, one input increases the initial successive units of input toward the output, but eventually this will add to less output

Question 27

Balancing at the margin

Answer 27

maximizing utility in light of scarcity

Question 28

Discounting the future

Answer 28

utility diminishes the further in the future that utility is realized