Questions and Answers
Scarcity refers to the __________ nature of society's resources.
limited
Which of the following statements refers to a macroeconomic issue?
The national unemployment rate is currently 7.7%.
Economics is the study of how people allocate their ________ resources to satisfy their nearly _________ wants.
limited; unlimited
Incentives can be classified as:
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What could be a possible trade-off of lower levels of pollution in a country where economic production comes from polluting factories?
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Opportunity cost is the ______________ alternative that must be sacrificed in order to get something else.
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The opportunity cost of attending college is likely to be highest for a high school graduate who is capable of playing a well-paid professional sport.
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What is Judy's marginal cost in terms of TV viewing to improve her grade from a 'B' to an 'A'?
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If Jewell chooses pasta for her entrée, then her opportunity cost is:
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Study Notes
Scarcity
- Scarcity highlights the limited nature of society's resources, impacting availability even for abundant resources like water and air.
Macroeconomics
- A macroeconomic issue illustrated by the national unemployment rate, currently at 7.7%, represents a broad employment measure reflective of the U.S. labor force.
Economics Definition
- Economics studies how people allocate limited resources to satisfy nearly unlimited wants, central to understanding decision-making on scarce resources.
Incentives
- Incentives are classified as positive (rewards) or negative (punishments) and as direct (clear outcomes) or indirect (subtle effects), influencing actions and decisions.
Trade-offs in Production
- Lower pollution levels may lead to trade-offs such as decreased economic production and lower incomes, as reductions are often a consequence of cutting factory operations.
Opportunity Cost
- Opportunity cost is defined as the highest-valued alternative sacrificed in decision-making, representing the next-best choice given up to pursue another option.
College Opportunity Cost
- The highest opportunity cost for attending college is typically for someone capable of earning a significant income, such as a professional athlete, due to potential earnings foregone.
Marginal Cost of Studying
- Judy's marginal cost for improving her exam grade from a "B" to an "A" is represented by the four hours she would have spent watching TV instead of studying longer.
Opportunity Cost in Choices
- When Jewell opts for pasta at the wedding, her opportunity cost consists of the chicken or steak, determined by her second choice, emphasizing the importance of alternative value in decision-making.
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Description
This quiz covers fundamental concepts from Chapter 1 of Economics, focusing on key ideas such as scarcity and macroeconomic issues. Test your understanding of these essential principles and their implications for society's resources.
