Econ Unit 1

In economics, the concept that represents the cost of forgoing the next best alternative when making a decision is known as ____________.

• exchange cost

• opportunity cost

• trade-off

• decision cost

Incentives motivate people to

• work for economic freedom

• create a variety of goods

• impose government regulations

• work, save, and invest

Austrian economist who believed very strongly in free markets. In his book The

Road to Serfdom, he defended free-market capitalism, and argued against socialist and collectivist thought.

• Friedrich Hayek

• John Maynard Keynes

• Adam Smith

• Milton Friedman

What is the term for the human effort expended in the creation of products and services?

What is the primary natural resource used in the production of goods and services (gifts of nature)?

What term is used to describe the tools, machinery, and buildings utilized in the production of goods and services?

Individuals who take risks to combine resources to create new goods and services

Gives people and businesses the opportunity to make their own economic decisions

Which one of the following is NOT an economic question?

• What goods and services should be produced?
• How should goods and services be produced?
• Who consumes these goods and services?
• how productive they will be

What do economic decisions produce?

• Wealth
• costs

• Investments
• Profits