Economics Chapter Quiz 1 – Flashcards
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Economics is primarily a study of __________.
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Choices
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Carl Menger is known as the father of what school of economics? Name a characteristic belief of this school of thought.
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Austrian economics; it stresses free market, limited government, and private ownership of property
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What are nuisance goods? Give an example.
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Goods that bear a negative economic cost; plastic packaging
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What do economists mean by a good's intrinsic value?
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The value ascribed to a product because of its nature
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What do economists call the regret a person feels for not choosing a particular option?
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Opportunity cost
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Define the economic idea of subjective value.
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The value ascribed to a product based on its usefulness to the buyer
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What do economists call the satisfaction that someone feels from choosing a particular option?
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Opportunity benefit
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What is the definition of a free good or service?
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A good or service provided freely by God in nature
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In economics, what is meant by the term insatiability?
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The condition of having unlimited wants and thus never being satisfied
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What unit of measurement do economists use to assess the satisfaction a person receives from a choice?
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Util
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What is the difference between macroeconomics and microeconomics? Give an example of each.
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Macroeconomics: concerned with large-scale economic choices/issues; ex: the rise/fall of bank interest rates Microeconomics: concerned with the choices of individual units; ex: why a person chooses to save money
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You must decide whether to attend your local community college or travel elsewhere for college. Name two possible opportunity benefits and two possible opportunity costs of these choices.
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Local benefits: staying close to family/friends, less expensive Local costs: less independence/freedom, not-as-great education Elsewhere benefits: better education, more freedom Elsewhere costs: separation from friends/family, more expensive
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What is an economist's term for the usefulness of a good or service?
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Utility
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State why an item would be more costly than the other based on intrinsic value such as a huge diamond in the rough and a diamond necklace. Explain your answer.
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A necklace takes more time and labor to craft than a diamond in the rough, so the necklace would be more costly.
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Describe the problem postulated by the diamond-water paradox. What is the solution to the problem?
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Which is more valuable--water or diamonds. Solution: subjective value.
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Recycling is an application of what biblical principle? Explain.
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Stewardship; it shows good management of the natural resources God gave us
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What is the difference between economic goods and services? Give an example of each.
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Economic goods are tangible (ex: a car) Economic services are intangible (ex: selling the car)
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List two reasons that the study of economics is considered a science.
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It uses observation and makes predictions
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List three examples that best fit into the realm of macroeconomics.
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Rising/falling bank interest rates, rate of unemployment, trade between countries
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The usefulness of an economic good is measured in ________.
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Utils
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How can one recognize the difference between an economic service and an economic good?
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Services are intangible; goods are tangible and have a measurable life span
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According to the text, list reasons why economics is considered a science.
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It uses observation, makes predictions, and manipulates variables
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According to the Austrian economist Carl Menger, what determines the value of an object?
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Subjective value
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What approach to economic study focuses on value judgments?
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Normative economics
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Give an example of positive economics as it relates to unemployment.
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Lower unemployment rates=better economy, better chance of getting a job
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What principle does Henry Hazlitt remind readers of in his story about the broken window?
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Hidden opportunity cost
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Your family decides to take a trip to Europe this summer instead of next because airline rates are currently low. What economic concept do the lower airline rates illustrate in your decision-making process?
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Opportunity benefit
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Suppose you have $40. You will receive 12 utils if you spend the money on a new shirt and 20 utils if you purchase a new album. What will your net utility be if you finally decide to buy an album?
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8 utils
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Conservation of natural resources primarily shows a grasp of which economic concept?
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Scarcity
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A family must quickly leave its home due to a fire. On her way out the door, the mother grabs the family photo album but leaves several expensive paintings behind. What economic concept do her actions best illustrate?
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Subjective value
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The economic cost of a good or service is __________.
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The value people place on a good or service
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After twelve years of faithful service, your family's car finally collapses beyond hope of repair and must be taken to the junkyard. Which economic term does this vehicle now best illustrate?
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Nuisance good
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What biblical concept refers to a person's responsibility to make proper choices with his resources?
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Stewardship
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Which two basic economic principles create the need for choices?
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Insatiability and scarcity
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According to the text, economics is ___________.
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The science of how and why people, businesses, and governments make the choices that they do
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What is the scriptural perspective on and answer to insatiability and scarcity? How do these principles affect a Christian's attitude toward his own pursuit and management of resources? Explain.
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Scripture tells us to be content with and appreciate what we have; being content helps curb insatiability, and if we appreciate what we have, we will protect and conserve what we have, thereby managing resources more responsibly
