Economics Chapter 1 Lesson 2 Quiz

Questions and Answers

What is rational self-interest?

Ignoring potential risks

Maximizing expected benefit with given cost (correct)

Acting against personal gain

Minimizing all costs

What does economic choice involve?

Comparison of expected marginal benefit and expected marginal cost.

Marginal refers to something that is incremental or additional.

True

What is microeconomics?

The study of individual economic behavior and choices. Signup and view all the answers

What does macroeconomics study?

The performance of the economy as a whole. Signup and view all the answers

Recessions are indicated by an increase in production and employment.

False Signup and view all the answers

What are economic fluctuations?

The rise and fall of economic activity relative to the long-term growth trend. Signup and view all the answers

Study Notes

Rational Self-Interest

Each individual aims to maximize benefits while minimizing costs in decision-making.
This principle guides personal choices and economic behaviors.

Economic Choice

Involves comparing expected marginal benefits against expected marginal costs.
Determines the best course of action based on cost-benefit analysis.

Marginal

Refers to incremental or additional changes in an economic variable.
Highlights shifts from the current state and their implications for decision-making.

Microeconomics

Focuses on individual economic behaviors and choices.
Analyzes how price and quantity are determined in specific markets.
Examines personal decisions like studying versus leisure, borrowing versus saving, and buying versus selling.

Macroeconomics

Studies the overall performance and health of the economy.
Looks at aggregate measures rather than individual markets.

Recessions

Characterized by declines in production, employment, and other economic indicators.
Reflects a downturn in economic activity impacting the broader economy.

Economic Fluctuations

Represent the cycles of rising and falling economic activity in relation to long-term growth trends.
Business cycles can vary in duration and intensity, affecting nations and global economies.

Description

Test your knowledge on rational self-interest and economic choices with these flashcards. Each term includes a definition to help reinforce your understanding of the concepts presented in Chapter 1, Lesson 2. Perfect for students looking to solidify their grasp on fundamental economic principles.