unit 1: basic economic concepts

Question 1

economics

Answer 1

social science concerned with the efficient use of scarce resources to achieve maximum satisfaction of economic wants.

Question 2

macroeconomics

Answer 2

study of the large economy as a whole or economic aggregates

Question 3

microeconomics

Answer 3

study of small economic units such as individuals, firms, and markets

Question 4

theoretical economics

Answer 4

economists use the scientific method to make generalizations and abstractions to develop theories

Question 5

policy economics

Answer 5

theories applied to fix problems or meet economic goals

Question 6

positive statements

Answer 6

based on facts. avoids value judgments (what is)

Question 7

normative statements

Answer 7

includes value judgments (what ought to be)

Question 8

5 Key Economic Concepts

Answer 8

1. Society has unlimited wants and limited resources
2. Due to scarcity, choices must be made, Every choice has a cost (trade-off)
3. Everyone’s goal is to make choices that maximize their satisfaction . Everyone acts in their own self-interest.
4. Everyone makes decisions by comparing the marginal costs and marginal benefits of every choice.
5. Real-life situations can be explained and analyzed through simplified models and graphs

Question 9

marginal analysis

Answer 9

(aka thinking on the margin) making decisions based on increments.

Question 10

the four factors of production

Answer 10

land, labor, capital, entrepreneurship

Question 11

land

Answer 11

all natural resources that are used to produce goods and services

Question 12

labor

Answer 12

any effort a person devotes to a task f0r which that persion is paid

Question 13

human capital

Answer 13

any skills or knowledge gained by a worker through education and experience

Question 14

physical capital

Answer 14

any human-made resource that is used to create other goods and services

Question 15

entrepreneurship

Answer 15

ambitious leaders that combine other factions of production to create goods and services

Question 16

profit

Answer 16

revenue-costs

Question 17

price

Answer 17

amount buyer / consumer pays

Question 18

cost

Answer 18

amount seller pays to produce a good

Question 19

investment

Answer 19

the money spent by businesses to improve their production