Chapter 1 Formative Assessment

(J)

Marginal Analysis is....

• Making decisions based on the scarcity of wants and needs.

• Making decisions based upon weighing the marginal benefits and costs of that action. The rational decision-maker will choose an action if the marginal benefit is greater than or equal to the marginal cost.

• Choosing between two options.

• The different quantities of goods that an economy can produce with a given amount of scarce resources.

(J)

The next unit, or increment, of an action.

• Marginal

• Opportunity Cost

• Trade Off

• Scarcity

(I)

Opportunity cost is best defined as

• The best rejected alternative you give up when making a decision

• The price you pay to purchase something

• The benefit you gain by making a decision

• The amount of debt you take on by making a decision

(A)

What is the fundamental problem of economics?

• How to keep consumers out of debt?

• How to fulfill our unlimited wants and needs with limited resources?

• How to figure out the way to make the most money?

• How do we ensure all people get a college education?

(H)

Which of the following statements is true?

• An economist would consider something scarce only if it is limited (not anything else)

• A trade off occurs when you give up something you want in order to get something else you want

• The economic social goal, economic equity, means everyone gets the same amount of money

• In a traditional economy, the government gets to decide the answers to the 3 basic economic questions

(I)

What is the opportunity cost of increasing production of chicken nuggets from 17 to 41 orders?

• 11 French Fries

• 11 Chicken Nuggets

• 14 French Fries

• 14 Chicken Nuggets

(A)

When people need to make economic choices due to a lack of available goods and money, this is called _________________________ in economic terms.

• trade offs

• scarcity

• opportunity cost

• incentive

(D,E,F,G)

Freddie wants to start a lawncare business and make extra money after school and on the weekends. What productive resources will he need to start his business.

• lawnmower, weed eater, gasoline

• Money to buy his neccessary materials

• land, labor and capital

• Money and tools

(B,C)

The difference between a good and a service is that:

• Goods are available in unlimited quantaties and services are not

• Goods can be carried home and services can not

• Services are available in unlimited quantaties and goods are not

• goods help satisfy unlimited wants and services do not

(H)

Which of the following statements is true?

• An economist would consider something scarce only if it is limited (not anything else)

• A trade off occurs when you give up something you want in order to get something else you want

• The economic social goal, economic equity, means everyone gets the same amount of money

• In a traditional economy, the government gets to decide the answers to the 3 basic economic questions