12 Questions
What does the term 'utility' mean in economics?
Pleasure and satisfaction
According to economists, why do people act rationally in their self-interest?
To increase their utility
What is one advantage of the corporate form of business?
Limited liability
What type of statements are most common in disagreements among economists?
Normative statements
Which fallacy suggests that what is true for the individual must necessarily be true for the group?
Fallacy of composition
What fallacy is committed in the statement: 'The government deregulated the electricity industry in California and a shortage of electricity soon occurred. It is clear that the deregulation caused the shortage'?
Post hoc, ergo propter hoc fallacy
What does the term 'laissez-faire' translate to in English?
Let it be
From where does the science of economics primarily stem?
Scarcity of resources relative to demand
What type of resource is a computer programmer considered in economics?
Capital resource
What does the law of demand state?
Price and quantity demanded are directly related
What is the function of a market in economics?
To bring together buyers and sellers
What concept does the idea of opportunity cost suggest?
Every resource has a cost
Study Notes
Key Concepts in Economics
- Utility refers to the satisfaction or pleasure that a person derives from consuming a good or service.
Rational Self-Interest
- Economists believe that people act rationally in their self-interest because they make decisions based on their own preferences and goals.
Business Organizations
- One advantage of the corporate form of business is that it provides limited liability to its owners, protecting their personal assets.
Economic Disagreements
- Normative statements, which involve value judgments, are most common in disagreements among economists.
Fallacies
- The fallacy of composition suggests that what is true for the individual must necessarily be true for the group.
- The fallacy of false cause is committed when one assumes that because two events are correlated, one must have caused the other, as in the example of deregulation and electricity shortage.
Economic Terms
- Laissez-faire translates to "let do" or "let go" in English, advocating for minimal government intervention in economic matters.
Roots of Economics
- The science of economics primarily stems from the study of human behavior and decision-making.
Resources
- A computer programmer is considered a human resource in economics, as they provide labor and skills.
Demand and Supply
- The law of demand states that as the price of a good increases, the quantity demanded of it decreases, ceteris paribus.
Market Functions
- The function of a market in economics is to allocate resources and distribute goods and services among consumers.
Opportunity Cost
- The concept of opportunity cost suggests that the value of the next best alternative that is given up when a choice is made represents the cost of that choice.
Test your knowledge of economics terms with these quiz questions. From understanding the concept of utility to advantages of the corporate form of business, this quiz covers a range of key economic principles.
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