Chapter 1.1

Question 1

Social sciences

Answer 1

Academic disciplines that study human society and social relationships

Question 2

Microeconomics

Answer 2

Examines the behavior of individual decision-making units in the economy

Question 3

Macroeconomics

Answer 3

Examines the economy as a whole to obtain a broad or overall picture of the economy

Question 4

Efficiency

Answer 4

Making the best possible use of scarce resources to avoid resource waste

Question 5

Allocative efficiency

Answer 5

When resources are used to produce the goods and services that mostly satisfy society’s needs and wants

Question 6

Equity

Answer 6

The idea of being fair or just

Question 7

Economic well-being

Answer 7

The level of prosperity, economic satisfaction and standards of living among the members of a society

Question 8

Sustainability

Answer 8

Refers to maintaining the ability of the environment and the economy to continue to produce and satisfy needs and wants into the future

Question 9

Interdependence

Answer 9

The idea that economic decision-makers interact with and depend on each other

Question 10

Intervention

Answer 10

Refers to government intervention, meaning that the government becomes involved with the workings of markets

Question 11

Resources

Answer 11

The inputs used to produce goods and services wanted by people, also known as factors of production

Question 12

Scarcity

Answer 12

The situation in which available resources, or factors of production, are finite, whereas wants are infinite. There are not enough resources to produce everything that human beings need and want

Question 13

Economics

Answer 13

The study of choices leading to the best possible use of scarce resources in order to best satisfy unlimited human needs and wants

Question 14

Sustainable resource use

Answer 14

The preservation of the environment over time

Question 15

Four factors of production

Answer 15

Land, labor, capital, entrepreneurship

Question 16

Land

Answer 16

Consists of all natural resources, including agricultural and non-agricultural land, as well as everything that is under or above the land

Question 17

Labor

Answer 17

The physical and mental effort people contribute to the production of goods and services

Question 18

Capital

Answer 18

A man-made factor of production used to produce goods and services

Question 19

Entrepreneurship

Answer 19

A special human skill possessed by some people, involving the ability to innovate by developing new ways of doing things, to take business risks and to seek new opportunities for opening and running a business

Question 20

Human capital

Answer 20

The skills, abilities and knowledge acquired by people, as well as good levels of health, all of which make them more productive

Question 21

Opportunity cost

Answer 21

The value of the next best alternative that must be sacrificed to obtain something else

Question 22

Free good

Answer 22

Any good that is not scarce, and therefore has a zero opportunity cost