Unit 1

Question 1

opportunity cost

Answer 1

to obtain something, forego next best thing

Question 2

marginal analysis

Answer 2

do benefits outweigh costs?

Question 3

principles of economics

Answer 3

generalizations, assumptions, graphs

Question 4

ceteris paribus

Answer 4

“all other things equal”, isolate variables

Question 5

utility

Answer 5

satisfaction

Question 6

purposeful behavior

Answer 6

actions with rationality + self-interest

Question 7

positive v normative

Answer 7

+ what is, norm what should be

Question 8

pitfalls

Answer 8

bias, loaded terminology, Post hoc fallacy, fallacy of composition, correlation not causation

Question 9

post hoc fallacy

Answer 9

false assumption that A preceding B means A caused B

Question 10

fallacy of composition

Answer 10

single variable might not apply to generalization

Question 11

wants

Answer 11

unlimited way of expressing desire for G&S

Question 12

factors of production

Answer 12

labor land, captial, entreprenerial ability

Question 13

ppt model

Answer 13

full employment, fixed resources, fixed technology, 2 goods produced

Question 14

Laissez-faire

Answer 14

gov creates outline, doesn’t interact

Question 15

command system

Answer 15

lack coordination, incentives; gov owns f.o.p

Question 16

market system

Answer 16

private property, freedom of enterprise/choice, self-interest, competition

Question 17

specialization

Answer 17

focus on one thing

Question 18

division of labor

Answer 18

use difference of ability for efficiency

Question 19

adam smith

Answer 19

first modern economist, invisible hand

Question 20

invisible hand

Answer 20

guides economy, advancement of society

Question 21

5 fundamental questions

Answer 21

1. what goods/services produced?
2. how will they be produced?
3. who will get output?
4. how will system accommodate change?
5. how will system promote progress?