Economics Basics Quiz

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Questions and Answers

What is scarcity?

The fact that there are limited resources to satisfy unlimited wants. (correct)
The abundance of resources to satisfy unlimited wants.
The fact that there are unlimited resources to satisfy limited wants.
The abundance of resources to satisfy limited wants.

What are economic resources?

Land, labor, capital, and entrepreneurship. (correct)
Land, labor, capital, and technology.
Land, labor, money, and entrepreneurship.
Land, labor, money, and technology.

What is ceteris paribus?

"All else equal" in Latin. (correct)
"All else unequal" in Latin.
"All things considered" in Latin.
"All things excluded" in Latin.

What is rational decision making?

<p>Assumes agents use all available information to make themselves as well off as possible (A)</p> Signup and view all the answers

What is the difference between positive and normative analysis?

<p>Positive analysis is analytical thinking about objective facts and cause-and-effect relationships that are testable, while normative analysis is subjective thinking about what we should value or a course of action that should be taken. (A)</p> Signup and view all the answers

Flashcards

Scarcity

Limited resources to meet unlimited wants

Economic Resources

Land, labor, capital, and entrepreneurship

Ceteris Paribus

All other things being equal

Rational Decision Making

Using all info to maximize benefit

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Positive vs. Normative Analysis

Positive: facts; Normative: values

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Study Notes

Economics is the study of how individuals and societies allocate scarce resources.
Scarcity is the fact that there are limited resources to satisfy unlimited wants.
Economic resources are land, labor, capital, and entrepreneurship.
Models are graphical and mathematical tools used to understand complicated economic processes.
Ceteris paribus means "all else equal" in Latin.
Agents make decisions based on incentives.
Rational decision making assumes agents use all available information to make themselves as well off as possible.
Positive analysis is analytical thinking about objective facts and cause-and-effect relationships that are testable.
Normative analysis is subjective thinking about what we should value or a course of action that should be taken.
Microeconomics studies the interactions of buyers and sellers in markets, while macroeconomics studies the overall output and health of nations.