Scarcity, Choice, and Opportunity Cost Quiz

Normative economics incorporates value judgments about what the economy should be like or what particular policy actions should be recommended to achieve a desirability of certain aspects of the economy. Examples: Positive statement: “The employment rate in several European nations is higher than that in the United States. Normative statements: 'European nations ought to undertake policies to reduce their unemployment rates.' Positive statement: 'Other things equal, if tuition is substantially increased, college enrollment will fall.' Normative statement: 'College tuition should be lowered so that more students can obtain an education.' SUMMARY Choices are forced on us by ______; economists study the choices that people make.

Scare goods are those for which the choice of one alternative requires giving up ______.

The opportunity cost of any choice is the value of the best alternative forgone in making that ______.

Some key choices assessed by economists include what to produce, how to produce it, and for whom it should be ______.

Economics is distinguished from other academic disciplines that also study choices by an emphasis on the central importance of opportunity costs in evaluating choices, the assumption of maximizing behavior that serves the interests of individual decision makers, and a focus on evaluating choices at the ______.

Normative economics incorporates ______ judgments about what the economy should be like or what particular policy actions should be recommended to achieve a desirability of certain aspects of the economy.

Positive statement: “The employment rate in several European nations is higher than that in the United States. Normative statements: 'European nations ought to undertake policies to reduce their unemployment rates.' Positive statement: 'Other things equal, if tuition is substantially increased, college enrollment will fall.' Normative statement: 'College tuition should be lowered so that more students can obtain an ______.'

SUMMARY Choices are forced on us by scarcity; economists study the choices that ______ make.

Scare goods are those for which the choice of one alternative requires giving up ______.

Some key choices assessed by economists include what to produce, how to produce it, and for whom it should be ______.