Unit 1 - Economic Decision Making

Question 1

define economics

Answer 1

a social science that studies the allocation of a limited number of resources that are available to satisfy the demand for goods and services.

Question 2

what takes a bottom-up approach to the economy

Answer 2

microeconomics

Question 3

what takes a top-down approach to the economy

Answer 3

macroeconomics

Question 4

what is a benefit, profit, or value that is given up in order to get something else?

Answer 4

opportunity cost

Question 5

what is scarcity

Answer 5

an economic problem or resources being limited

Question 6

what is the ability of a person or country to produce a good or service for the lowest opportunity cost?

Answer 6

comparative advantage

Question 7

what is the satisfaction or benefit gained from consuming a good or service

Answer 7

utility

Question 8

what is marginal cost

Answer 8

extra cost in making a decision

Question 9

when a consumer makes a decision, it is assumed that MB is greater than, or at the very least equal to, Marginal Cost. true or false?

Answer 9

true

Question 10

What is a law of economics that states that, all others remaining constant, as a person increases consumption of a product there is a decline in marginal utility derived from consuming each additional unit of the product?

Answer 10

Law of diminishing marginal utility

Question 11

What is the phenomenon used to refer to a point at which the level of profits and benefits gained is less than the amount of money or energy invested?

Answer 11

law of diminishing returns

Question 12

what is the study of the decision making process made by individuals and firms in the economy?

Answer 12

microeconomics

Question 13

when the market state of supply and demand are balanced, it is referred to as what?

Answer 13

equilibrium

Question 14

what are the three basic needs humans require to survive?

Answer 14

food, shelter, clothing

Question 15

what allows most common goods to be widely available at affordable prices in the modern world?

Answer 15

mass production

Question 16

during what time period did the shift to mass production begin in the US?

Answer 16

Late 1800s

Question 17

What was the transition from an agriculture-based economy to an industry-based economy due to population increases and a need for increased production of goods?

Answer 17

the industrial revolution

Question 18

In the early 1900s, who developed assembly lines which drastically reduced the cost of production in automobiles thus making them readily available to the public and soon was adopted by many other types of industries?

Answer 18

Henry Ford

Question 19

what does the graph illustrate?

Answer 19

The line graph illustrates the phenomenon of diminishing returns associated with the increased input of labor.

Question 20

When a firm thinks on the margin when deciding whether to increase production, they will consider the __________________ in relation to the MC (marginal costs).

Answer 20

MR (Marginal Revenue)

Question 21

What are extra or additional increases from a current situation looking at both benefits and costs?

Answer 21

margins