Economics Module 1

Question 1

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limited resources means that everyone cannot have all they want, must face choices

Answer 1

scarcity

Question 2

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process of making choices

Answer 2

decision making

Question 3

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choice that is the most desirable

Answer 3

best/optimal choice

Question 4

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relative desires

Answer 4

economic wants

Question 5

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what is actually required in order to survive

Answer 5

biological needs

Question 6

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there are limited resources, each decision has trade offs

Answer 6

why choices are made

Question 7

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system for coordinating society’s productive activities

Answer 7

economy

Question 8

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what kinds of choices the economy requires

Answer 8

production, distribution, consumption

Question 9

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institutional arrangement or methods used in order to make choices for the economy

Answer 9

economic system

Question 10

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allocating different limited quantities

Answer 10

rationing

Question 11

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type of rationing done by determining prices

Answer 11

rationing in a market economy

Question 12

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goods it is difficult to survive without a minimum amount of

Answer 12

necessities

Question 13

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more wants than is possible= prices go up
increased demand= increased prices

Answer 13

peak/dynamic/real-time/demand based pricing

Question 14

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when output and income decline for at least six months

Answer 14

recession

Question 15

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information that consumers use so that they make the right decisions

Answer 15

price signals

Question 16

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individuals make decisions on behalf of households or firms

Answer 16

self interest

Question 17

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choices are made that are best for the society as a whole

Answer 17

social interest

Question 18

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in pursuing your own interests, you often end up supporting society’s interests, reason for market system not being chaos

Answer 18

invisible hand

Question 19

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market fails to achieve the best use of society’s resources, when the pursuit of self interest leaves the rest of society worse off

Answer 19

market failure

Question 20

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individuals on behalf of households and firms own resources and make decisions, decentralized

Answer 20

free markets/capitalism/laissez faire

Question 21

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government owns resources and makes decisions, not a lot of consumer goods, centralized

Answer 21

command/centrally planned economy

Question 22

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no central plan for the economy, no set prices, no set breakdown of resources

Answer 22

decentralized

Question 23

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property in which the gains and losses are solely on you

Answer 23

private property

Question 24

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have aggregate wealth increased by the use of resources rather than spreading the wealth

Answer 24

goal of capitalism

Question 25

# t self interest=social interest

Answer 25

best outcome

Question 26

# t when assumptions hold

Answer 26

theories are valid

Question 27

# t studies how people make decisions and how these decisions interact

Answer 27

microeconomics

Question 28

# t studies the overall ups and downs in the economy

Answer 28

macroeconomics

Question 29

# t growing ability of the economy to produce goods and services

Answer 29

economic growth

Question 30

# t economic growth that does not harm the environment

Answer 30

sustainable long-run economic growth

Question 31

# t decision by an individual of what to do and what not to do

Answer 31

individual choice

Question 32

# t first principle of individual choice

Answer 32

choices are necessary because resources are scarce

Question 33

# t anything that can be used to produce something else

Answer 33

resource

Question 34

# t resources supplied by nature

Answer 34

land

Question 35

# t effort of workers, measured by hours of people at work

Answer 35

labor

Question 36

# t any manufactured aid to production

Answer 36

physical capital

Question 37

# t acquired skills, education, and training of those in the work force

Answer 37

human capital

Question 38

# t second principle of individual choice

Answer 38

the true cost of something is its opportunity cost

Question 39

# t what you must give up/sacrifice in order to get something, benefits forgone from not picking the next best alternative

Answer 39

opportunity cost

Question 40

# t third principle of individual choice

Answer 40

"how much" is a decision at the margin

Question 41

# t comparing the cost with the benefits of doing something

Answer 41

trade-off

Question 42

# t decisions about whether to do a bit more or a bit less of an activity

Answer 42

marginal decisions

Question 43

# t study of marginal decisions

Answer 43

marginal analysis

Question 44

# t fourth principle of individual choice

Answer 44

people usually respond to incentives, exploiting opportunities to make themselves better off

Question 45

# t anything that causes a person to change their behavior or decision, basis of all predictions about individual choices and decisions

Answer 45

incentive

Question 46

# t what an individual item bought is worth

Answer 46

price

Question 47

# t amount needed to produce a product

Answer 47

cost

Question 48

# t type of resource that can be produced

Answer 48

capital

Question 49

# t benefits or doing a little more or less of something

Answer 49

marginal benefits

Question 50

# t costs of doing a little more or less of something

Answer 50

marginal costs

Question 51

# t a person increases an activity

Answer 51

when MB is greater than or equal to MC

Question 52

# t quantity of resources

Answer 52

input

Question 53

# t knowledge about how to combine inputs, how to combine goods and services

Answer 53

technology

Question 54

# t prices of inputs

Answer 54

cost of production

Question 55

# t a person decreases an activity

Answer 55

when MB is less than MC