Economics Chapter 1: Understanding Economics Basics

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What is the term for the tools, instruments, machines, buildings, and other constructions that are used to produce goods and services?

Capital (correct)

Land

Labor

Entrepreneurship

Who gets the goods and services produced in an economy?

Only people who work

Those who earn the highest incomes

Everyone, depending on their income (correct)

Only entrepreneurs

What is the role of entrepreneurship in the economy?

To manage capital

To supply land

To provide labor

To organize land, labor, and capital (correct)

What do economists mean by 'For Whom'?

Who gets the goods and services produced Signup and view all the answers

What is the key question related to the pursuit of self-interest in economics?

Does self-interest lead to social welfare? Signup and view all the answers

What is the term for choices that are best for society as a whole?

Social interest Signup and view all the answers

What is the focus of macroeconomics?

The study of the effects on the national and global economy Signup and view all the answers

What is the primary concern of the first big economic question?

What goods and services are produced Signup and view all the answers

What percentage of Americans worked on farms sixty years ago?

25 percent Signup and view all the answers

What is the term for the knowledge and skill that people obtain from education and experience?

Human capital Signup and view all the answers

What are the four categories of factors of production?

Land, Labor, Capital, and Entrepreneurship Signup and view all the answers

What is the primary goal of individuals and businesses in making economic choices?

To pursue self-interest Signup and view all the answers

What is the primary reason why economic questions arise?

Because we want more than we can get Signup and view all the answers

What is the term used to describe the inability to satisfy all our wants?

Scarcity Signup and view all the answers

What is the focus of microeconomics?

The study of choices made by individuals and businesses, and the influence of government on those choices Signup and view all the answers

What is an incentive in economics?

A reward that encourages an action Signup and view all the answers

What is the main objective of studying economics in a changing world?

To understand the powerful forces that are shaping and changing our world Signup and view all the answers

What is economics defined as?

The social science that studies the choices that individuals, businesses, governments, and societies make as they cope with scarcity and the incentives that influence and reconcile those choices Signup and view all the answers

What is the term used to describe the highest-valued alternative that we give up to get something?

Opportunity cost Signup and view all the answers

When making choices, people typically evaluate the consequences of making what kind of changes in the use of their resources?

Incremental changes Signup and view all the answers

What is the term used to describe the benefit from pursuing an incremental increase in an activity?

Marginal benefit Signup and view all the answers

What do economists try to isolate when studying economic behavior?

Cause-and-effect relationships Signup and view all the answers

What is the term used to describe a description of some aspect of the economic world that includes only those features of the world that are needed for the purpose at hand?

Economic model Signup and view all the answers

What is the term used to describe the device that economists use to hold all other relevant factors unchanged when trying to isolate the effect of interest?

Ceteris Paribus Signup and view all the answers

What is the central idea of the economic way of thinking?

The concept of scarcity and its implication, choice Signup and view all the answers

What is the 'guns versus butter' tradeoff an example of?

A tradeoff between military spending and consumer goods Signup and view all the answers

When do 'what' tradeoffs arise?

When people choose how to spend their incomes Signup and view all the answers

What is the result of government redistribution of income?

A tradeoff between equality and efficiency Signup and view all the answers

What is a common theme among the big economic questions listed?

The allocation of scarce resources Signup and view all the answers

What is the implication of scarcity in the economic way of thinking?

Choice and tradeoffs Signup and view all the answers