Chapter 1: Limits, Alternatives, And Choices Questions And Answers – Flashcards
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Economics assumes that human behavior reflects "_____ self-interest."
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Rational
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Utility is defined as:
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The satisfaction or pleasure obtained by consumers from consuming a good or service
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Which of the following results from having scarce economic resources?
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The production of limited goods and services.
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The highest-valued alternative that is given up or sacrificed when choosing to produce or consume one good over another is referred to as:
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An opportunity cost
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When comparing the additional or incremental costs versus additional or incremental benefits of a decision, one is engaging in:
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marginal analysis
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True or false: Economics relies on the scientific method, which is unique to economics alone.
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false
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____ is the discipline that examines either the economy as a whole or its aggregates.
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Macroeconomics
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_____ is the discipline of economics concerned with individual units such as households, firms and government.
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Microeconomics
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An aggregate is a collection of:
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specific economic units treated as if they were one unit
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_____ economics focuses on facts and cause-and-effect relationships.
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Positive
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True or false: Positive economics encourages value judgments.
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False
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The ____ problem refers to the need to make choices because economic wants exceed economic means.
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economizing
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Everyone, even the very wealthy, has a _____ amount of income.
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limited
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For better or worse, people have virtually ____ wants.
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Unlimited
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The situation where one thing has to be given up in order to have some other item is called a:
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trade-off
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All natural, human and manufactured goods that go into the production of goods and services are considered society's _____ economic resources.
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scarce
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The four general categories of economic resources are:
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Labor, entrepreneurship, capital, natural resources
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The following are synonymous with land to an economist:
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Arable land, Oil and mineral deposits, water, sunlight, forests
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From a economic standpoint, _____ includes all natural resources used in the production process.
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Land
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In addition to entrepreneurship, the resource of human capital and _____ consists of the physical action and mental activities that people contribute to the production of goods and services.
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Labor
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For economists, _____ goods includes all manufactured aids used in producing consumer goods and services.
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Capital
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In economics, the term ____ describes spending that pays for the production and accumulation of capital goods.
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Investment
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The function of an entrepreneur is:
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To combine the resources of land, labor and capital to produce a good or service To commercialize new products
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A _____ lists the different combinations of two products that can be produced with a specific set of resources, assuming full employment.
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Production possibilities table
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A production possibilities curve illustrates the attainable combination:
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of two goods that can be produced given a specific set of resources
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The law of increasing _____ states that as production of a particular good increases the cost of producing an additional unit rises.
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Opportunity Costs
