Economics Flashcard

Front

Economics is often defined as the study of how people choose to…

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use limited resources to satisfy their unlimited wants

Front

People’s wants are unlimited. This fact means that which of the following is always present? Scarcity, Shortages, Marginal utility, Costs of production

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Scarcity

Front

Which statement is the best example of thinking at the margin? Options: John has six shirts and is trying to decide whether to buy a seventh., Mary observes that the average cost of shoes is higher than last year., David decides to volunteer this summer instead of working for pay., Jane wants to buy a car but decides she cannot afford the insurance.

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John has six shirts and is trying to decide whether to buy a seventh.

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What are the factors of production?

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land, labor, and capital

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Why are tradeoffs necessary?

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resources are limited.

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Which scenario best illustrates the law of diminishing marginal utility? A car breaks down more often as it gets older. A collector of China figurines is eager to get a new one. Someone who doesn't listen to music does not care about getting a new CD. A new toy is less exciting to a child with many toys than to a child with just a few.

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A new toy is less exciting to a child with many toys than to a child with just a few.

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An economic model that shows how an economy might use its resources to produce two goods is called

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a production possibilities frontier.

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What do economists mean when they use the word "land"?

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natural resources used to produce goods and services

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Goods are

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physical objects produced for sale.

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Which of these economic goals is most important in a market economy? growth and survival, stability and security, freedom and efficiency, tradition and authority

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freedom and efficiency