Eco01H_Revision_Chapter 1

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When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

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scarcity

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The phenomenon of scarcity stems from the fact that

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resources are limited.

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Economists use the word equality to describe a situation in which

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each member of society has the same income.

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Efficiency means that

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society is getting the maximum benefits from its scarce resources.

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What should be included when computing the opportunity cost of attending a concert?

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The price you pay for the ticket and the value of your time.

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What is Denise's opportunity cost of working overtime for three hours instead of watching a video with her friends?

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The enjoyment she would have received had she watched the video.

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Making rational decisions "at the margin" means that people

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compare the marginal costs and marginal benefits of each decision.

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A rational decision maker takes an action only if

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marginal benefit is greater than the marginal cost.

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You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should

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compare the cost of staying one more semester to the benefits of staying one more semester.

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In the circular-flow diagram, which of the following is not a factor of production? labor, land, capital, money

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money