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In deciding whether to study for an economics quiz or go to a concert, one is confronted by the idea(s) of

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scarcity and opportunity costs.

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The four factors of production are

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land, labor, capital, and entrepreneurial ability.

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A recurring theme in economics is that people

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have unlimited economic wants but limited resources.

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(Consider This) An exception to the advice "go to college, stay in college, and earn a degree" occurs when

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the opportunity cost of attending college is extraordinarily high.

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From an economic perspective, when a student decides to go to the movies instead of studying for a test, it indicates that in the student's thinking, the marginal

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cost of going to the movies is less than the marginal benefit of going to the movies.

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From an economic perspective, when a consumer decides to buy more life insurance, the consumer has most likely concluded that the

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marginal benefit of more insurance coverage is greater than the marginal cost.

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Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase.

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purposeful behavior.

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In economics, the pleasure, happiness, or satisfaction received from a product is called

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utility.

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One basic difference between "land" and "capital" resources is that land is

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natural, while capital is created by humans.

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According to economists, economic self-interest

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is a reality that underlies economic behavior.

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The economizing problem for individuals is a consequence of the fact that

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economic wants are greater than economic means or incomes.

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A budget line is a graph that shows the various combinations of two products that a

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consumer can buy with a given amount of money income.

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Money is not considered to be an economic resource because

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as such it is not productive.

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The notion of "purposeful behavior" in the economic perspective suggests that

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one person's choice may differ from another's if their circumstances and information differ.

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One basic difference between "labor" and "entrepreneur" is that

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labor is hired by a firm, whereas the entrepreneur owns the firm.

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You should decide to go to a movie

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if the marginal benefit of the movie exceeds its marginal cost.

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When economists say that people act rationally in their self-interest, they mean that individuals

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look for and pursue opportunities to increase their utility.

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The process of observing real-world behavior, developing hypotheses, testing them against facts, then using the results to construct theories is called

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the scientific method.

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The opportunity cost to a consumer who smokes cigarettes consists of the

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products that the consumer could have bought instead of cigarettes.

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The economic principle that the "unemployment rate will tend to increase as the economy moves into a recession" is an example of

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a generalization.

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Money is not an economic resource because

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money, as such, does not produce anything.

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Joe sold gold coins for $1,000 that he bought a year ago for $1,000. He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money because he could have received a 3 percent return on the $1,000 if he had bought a bank certificate of deposit instead of the coins. The economist's analysis in this case incorporates the idea of

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opportunity costs.

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Economics is a social science that studies how individuals, institutions, and society may

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best use resources to maximize satisfaction of economic wants.

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The main function of the entrepreneur is to

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innovate.

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The economizing problem faced by society is essentially one of deciding how to make the best use of

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limited economic resources to satisfy unlimited economic wants.

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(Consider This) Consumers might leave a fast-food restaurant without being served because

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they conclude that the marginal cost (monetary plus time costs) exceeds the marginal benefit.

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The opportunity cost of doing or getting something is defined as

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the value of the best alternative that is given up in order to do or get something.

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What is a major opportunity cost of going to college on a full-time basis?

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the forgone income that would have been earned working in a full-time job

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Economists contend that most economic decisions are

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purposeful.

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Economic resources are also called

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factors of production.

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Economics may best be defined as the

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social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity.

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The opportunity cost of constructing a new public highway is the

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value of other goods and services that are sacrificed in order to construct the new highway.

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Economic analysis assumes "purposeful behavior," which means that people will pursue decisions or actions

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that will increase their well-being.

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If someone produced too little of a good, this would suggest that

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the good was produced to the point where its marginal benefit exceeded its marginal cost.

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For economists, the word "utility" means

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pleasure or satisfaction.

Chapter 1 Macroeconomics Test Questions – Flashcards

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