Chapter One Quiz

What are the 3 Economic Ideas? 1. [blank_start]People are rational[blank_end] 2. [blank_start]People respond to economic incentives[blank_end] 3. [blank_start]Optimal decisions are made at the margin[blank_end]

Why do people make choices?

What are the 3 economic fundamental questions 1. [blank_start]What goods and services will be produced[blank_end]? 2. [blank_start]How will goods and services be produced[blank_end]? 3. [blank_start]Who will receive the goods and services[blank_end] produced?

What are the 2 opposing answers to the 3 fundamental economic questions

The following statement: "gas prices are too low" is what kind of statement:

Define market, economics, and scarcity. 1. Market: [blank_start]group of buyers/sellers of a good or ser[blank_end][blank_start]vice and the institution or arrangement[blank_end] [blank_start]by which they come together to trade[blank_end] 2. Economics: [blank_start]analyzing how people make choices[blank_end] [blank_start]and interact in markets[blank_end] 3. Scarcity: [blank_start]situation in which[blank_end] [blank_start]unlimited wants exceed the limited res[blank_end][blank_start]ources available to fulfill those wants[blank_end]

People make decisions because of scarcity

Define opportunity cost. Opportunity cost: [blank_start]the highest valued alternative that must[blank_end] [blank_start]be given up to engage in an activity[blank_end]