Unit 1 Parts 1-3

Question 1

What are the three important economic questions?

Answer 1

What to produce. How to produce it. For whom to produce.

Question 2

focuses on individual decision-making units and how they interact; it includes the study of individual markets and individuals in those markets

Answer 2

Microeconomics

Question 3

explores the economy as a whole and how whole economies interact

Answer 3

Macroeconomics

Question 4

the fixed amount of goods or services available

Answer 4

Scarcity

Question 5

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

Answer 5

Traditional Economy

Question 6

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

Answer 6

Command Economy

Question 7

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

Answer 7

Market Economy

Question 8

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

Answer 8

Mixed Economy

Question 9

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

Answer 9

Opportunity Cost

Question 10

An either/or choice

Answer 10

Trade Off

Question 11

objects that can fulfill human wants/needs, provide utility

Answer 11

Goods

Question 12

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

Answer 12

Services

Question 13

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

Answer 13

Endowment

Question 14

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

Answer 14

Utility

Question 15

a measure of utility (this is an abstract concept)

Answer 15

Util

Question 16

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

Answer 16

Margin

Question 17

evaluating the impact of one additional unit

Answer 17

Marginal Analysis

Question 18

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

Answer 18

Marginal Utility

Question 19

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

Answer 19

Total Utility

Question 20

satisfy

Answer 20

Satiate

Question 21

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

Answer 21

Initial Decision

Question 22

maximization of utility

Answer 22

Bliss point

Question 23

utility diminishes the further in the future that utility is realized

Answer 23

Discounting the future

Question 24

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

Answer 24

Diminishing Marginal Productivity

Question 25

maximizing utility in light of scarcity

Answer 25

Balancing at the margin

Question 26

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

Answer 26

Profit Motive

Question 27

the economic power of the individual in a free market

Answer 27

Consumer Sovereignty

Question 28

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

Answer 28

Government regulation

Question 29

these vary from person to person/society/economy, etc. Some of the differences may focus on:
Freedom
Security
Equity
Growth
Efficiency
Stability

Answer 29

Social and Economic Goals