Economics Chapter 1: Limits, Alternatives, and Choices
10 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which type of economics is concerned with value judgments?

  • Macroeconomics
  • Normative economics (correct)
  • Microeconomics
  • Positive economics
  • What is the name of the graph that shows different combinations of two goods that an economy can produce?

  • Economizing problem graph
  • Supply and demand curve
  • Production possibilities model (correct)
  • Budget line
  • What is the law that states that as more of a particular good is produced, its marginal opportunity costs increase?

  • Law of diminishing returns
  • Law of supply and demand
  • Law of economic growth
  • Law of increasing opportunity costs (correct)
  • What is the name of the curve that shows the different combinations of two goods that an economy can produce, given its resources and technology?

    <p>Production possibilities curve</p> Signup and view all the answers

    What is the term for the problem of unlimited wants and limited income?

    <p>Economizing problem</p> Signup and view all the answers

    What is the primary reason for the existence of scarcity in economics?

    <p>Because human wants are unlimited</p> Signup and view all the answers

    What is the term for the value of the next best alternative that is given up when a choice is made?

    <p>Opportunity cost</p> Signup and view all the answers

    What is the primary goal of firms in a market economy?

    <p>To maximize profit</p> Signup and view all the answers

    What is the term for the process of making decisions based on the additional benefits and costs of a particular action?

    <p>Marginal analysis</p> Signup and view all the answers

    What is the fundamental economic problem that arises due to the scarcity of resources?

    <p>How to allocate resources efficiently</p> Signup and view all the answers

    Study Notes

    Microeconomics and Macroeconomics

    • Microeconomics studies the individual consumer, firm, or market
    • Macroeconomics studies the entire economy or a major aggregate of the economy

    Positive and Normative Economics

    • Positive economics deals with factual economic statements
    • Normative economics involves value judgments in economic statements

    The Economizing Problem

    • The economizing problem arises from limited income and unlimited wants
    • The budget line shows attainable and unattainable combinations of goods and services
    • Trade-offs and opportunity costs are involved in making choices

    Consumer's Budget Line

    • The budget line represents the different combinations of two goods that can be purchased with a given income
    • The budget line is determined by the income and prices of the two goods

    Society's Economizing Problem

    • Society's economizing problem involves the allocation of four categories of economic resources: land, labor, capital, and entrepreneurial ability
    • Entrepreneurs employ the other factors of production, take initiative, make strategic business decisions, innovate, and take risks

    Production Possibilities Model

    • The production possibilities model shows different combinations of two goods that an economy can produce with full employment, fixed resources, and fixed technology
    • The model is used to illustrate the trade-offs between consumer goods and capital goods

    Production Possibilities Graph

    • The production possibilities graph shows the different combinations of two goods that an economy can produce
    • The graph is concave due to the law of increasing opportunity costs

    Law of Increasing Opportunity Costs

    • The law of increasing opportunity costs states that as more of a particular good is produced, its marginal opportunity costs increase
    • The production possibilities curve has a concave shape due to this law

    Optimal Output

    • The optimal output is achieved when the marginal benefit equals the marginal cost

    Growing Economy

    • A growing economy can produce more of both goods due to economic growth
    • The production possibilities curve shifts outward due to economic growth

    Economics

    • Economics is a social science concerned with making optimal choices due to scarcity
    • Scarcity and choice lead to opportunity costs and the need for purposeful behavior to increase utility
    • Marginal analysis is used to make decisions based on the marginal benefits and costs of a choice

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Description

    This quiz covers the basics of economics, including scarcity, opportunity cost, and the economic perspective. It introduces the concept of economics as a social science and explores the role of human behavior in making optimal choices.

    More Like This

    Use Quizgecko on...
    Browser
    Browser