Econ Section I: Fundamental Economic Concepts

A local grocery store is trying to optimize its inventory. On average, how many different items should it stock to match the average supermarket?

• 333,000

• 33,333

• 3,300

• 33,000

In the context of economics, what does the term 'scarcity' refer to when considering the production of goods and services?

• The insatiable desires of human beings

• The limited resources available to produce goods and services

• The choices individuals make to allocate resources

• The trade-offs individuals face in decision making

When deciding to invest in a new business, what is the opportunity cost of the investment?

• The monetary price paid for the investment

• The value of the next best alternative investment that is given up

• The benefits of the investment compared to the costs

• The time spent researching and making the investment decision

What does rationality mean in economics?

• Making choices based on emotions and feelings

• Making choices without considering the benefits and costs

• Making choices by comparing the benefits and opportunity costs

• Making choices based on social issues

In a small town, a farmer and a baker decide to exchange goods. What is the primary benefit of this trade?

• It allows the farmer and the baker to specialize in activities they are best at

• It reduces the number of choices the farmer and the baker have to make

• It guarantees that both the farmer and the baker will be better off

• It eliminates scarcity and trade-offs for the farmer and the baker

What is positive economics?

• The use of economic analysis to describe and explain economic phenomena and make predictions

• The use of economic analysis to guide decisions about what should be

• The use of economic analysis to evaluate the relative merits of different situations

• The use of economic analysis to create profitable results for all industries

What is normative economics?

• The use of economic analysis to describe and explain economic phenomena

• The use of economic analysis to guide decisions about what should be

• The use of economic analysis to evaluate the relative merits of different situations

• The use of economic analysis to predict future economic outcomes

What is Pareto efficiency?

• A situation in which everyone is equally well-off

• A situation in which no one is worse off

• A situation in which the benefits outweigh the costs

• A situation in which no one can be made better off without making someone else worse off

What is the focus of microeconomics?

• Individual behavior and the operation of particular markets

• The overall performance of the national economy

• The interaction between individuals and businesses

• The factors that determine the overall level of production and employment

What is the focus of macroeconomics?

• Individual behavior and the operation of particular markets

• The overall performance of the national economy

• The interaction between individuals and businesses

• The factors that determine the overall level of production and employment