Economics Basics Quiz

Questions and Answers

What does Ralph Waldo Emerson's statement about want relate to in economics?

Wants and resources are scarce.

Wants and resources are unlimited.

Wants are limited and resources are scarce.

Wants are unlimited and resources are scarce. (correct)

Why is the '1 free' in 'Buy 2, get 1 free' not free to society?

Because society's resources were used in production.

Through what operation are scarce resources allocated in a market system?

Opportunity cost.

Which option best describes the concept of utility?

The satisfaction from consuming goods or services Signup and view all the answers

Which decision involves consideration of marginal costs and marginal benefits?

Come to class Signup and view all the answers

Which of the following is not a key element of the scientific method?

Designing data Signup and view all the answers

Indicate whether each statement applies to microeconomics or macroeconomics:

A. The unemployment rate in the United States was 9.0 percent in April 2011. = Macroeconomics B. A U.S. software firm discharged 15 workers last month and transferred the work to India. = Microeconomics C. An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise. = Microeconomics D. U.S. output, adjusted for inflation, decreased by 2.9 percent in 2010. = Macroeconomics E. Last week, Wells Fargo Bank lowered its interest rate on business loans by one-half of 1 percentage point. = Microeconomics F. The consumer price index rose by 1.6 percent in 2010. = Macroeconomics Signup and view all the answers

Economic resources are the __________ inputs used to produce goods and services.

natural, human, and manufactured Signup and view all the answers

Economists classify resources as:

Labor, land, real capital, and entrepreneurs. Signup and view all the answers

Economic resources are also called:

Factors of production or inputs. Signup and view all the answers

Study Notes

Economics Basics

Ralph Waldo Emerson's quote highlights the economic principle that wants are unlimited while resources are scarce.
The fundamental economic problem is satisfying unlimited wants with finite resources.

Market Concepts

"Buy 2, get 1 free" illustrates that even if one item seems free to consumers, society incurs production costs, indicating resource allocation.
Opportunity cost refers to what is sacrificed to use resources for their next best alternative, which is higher in valuable locations like New York City.

Utility and Economic Behavior

Utility represents the satisfaction derived from consuming goods or services, impacting consumer behavior and choices regarding time, energy, and money allocation.
The marginal analysis involves comparing marginal benefits (gains from an action) against marginal costs (what is given up) to make informed decisions, such as whether to attend class.

Scientific Method in Economics

Key elements of the scientific method involve gathering data, formulating hypotheses, testing and validating these hypotheses, and not designing data.
Economists use this method to formulate and predict economic laws or principles based on systematic observation and testing.

Microeconomics vs. Macroeconomics

Macroeconomic indicators include overall unemployment rates and changes in the consumer price index, while microeconomic examples cover individual firm layoffs and localized market price changes.
Individual actions, like a bank adjusting interest rates or a company outsourcing labor, fall under microeconomics, demonstrating direct impacts on specific sectors.

Economic Resources

Economic resources are classified as natural, human, and manufactured inputs used in production.
The main classifications of resources include labor, land (natural resources), real capital (machinery, buildings), and entrepreneurs who coordinate production.
Economic resources are also known as factors of production, emphasizing their role in creating goods and services.

Description

Test your understanding of fundamental economic concepts, including scarcity, opportunity cost, and utility. Explore how these principles affect consumer behavior and decision-making. Perfect for students new to economics!