Chapter 1: What is Economics?

Question 1

sacrcity

Answer 1

the fundamental and universal economic problem.

=the inability to get everything we want

Question 2

economics

Answer 2

the social science that studies the choices that individuals, businesses, governments and entire societies have to make as they cope with scarcity.

Question 3

microeconomics

Answer 3

the study of choices that individuals and businesses make, the way these choices interact in markets, and the influence of governments.

Question 4

macroeconomics

Answer 4

the study of the performance of the national economy and the global economy.

Question 5

goods and services

Answer 5

the objects that people value and produce to satisfy human wants.

Question 6

factors of production (list 4)

Answer 6

land
labor
capital
entrprenuership

Question 7

land

Answer 7

“gifts of nature” ex. land, minerals and water used to produce goods and services.

Question 8

labor

Answer 8

the work time and work effort people devote to producing goods and services.

Question 9

human capital

Answer 9

the quality of labor depends on _____ _____

Question 10

capital

Answer 10

tools, instruments, machines, buildings and other constructions that businesses use to produce goods & services.

Question 11

financial capital

Answer 11

money, stocks, bonds

Question 12

entreprnuership

Answer 12

the human resources that organizes land, labor, and capital.

Question 13

what do they earn?
land=\_\_\_
labor=\_\_\_
capital=\_\_\_
entrepreneurship=\_\_\_

Answer 13

land=rent
labor=wages
capital=interest
entrepreneurship=profit

Question 14

tradeoff

Answer 14

an exchange- giving up one thing to get something else.

Question 15

rational choices

Answer 15

people make rational choices= they compare the costs and benefits and then make the choice that achieves the greatest benefit over cost.

Question 16

opportunity cost (of something)

Answer 16

is the highest-valued alternative that must be given up to get it.
not all the alternatives foregone, it is ONLY the highest-valued.
all tradeoff involves an opportunity cost.

Question 17

marginal benefit

Answer 17

the benefit that arises from an increase in an activity

Question 18

marginal cost

Answer 18

the opportunity cost of an increase in an activity

Question 19

margin

Answer 19

choices that compare the marginal benefit of a small change to the marginal cost of the small change are said to be made at the ___

Question 20

economic model

Answer 20

a description of some aspect of the economic world that includes only those features of the world that are needed for the purpose at hand.