Fundamental Economic Concepts

Into what two categories can wants be divided?

• Unlimited and economics

• Economic and noneconomic

John only had $40 to spend and couldn’t decide whether to buy a new pair of jeans or to go to an amusement park. He finally decided to spend his money on the amusement park. What was the opportunity cost of his decision?

• $40

• New pair of jeans

A manager is willing to accept the production of fewer products as long as their workers produce higher-quality products. The manager is making a(n)

• capital good

• trade-off.

What are the three basic economic questions?

• What products will be produced, how will products be produced, and how will products be allocated

• Where will products be produced, when will products be produced, and what products will be produced

The ultimate goal of all economic activity is

• consumption

• production

For consumption to occur, goods and services must be

• produced

• exchanged

What do consumers, producers, and the owners of resources do with money payments to create a flow of resources, goods, services, and money payments?

• Produce

• Exchange

Consumers are typically most willing to pay more for goods and services that bring them greater

• popularity

• satisfaction

Seeing a movie at a theater would be considered a(n) __________ want.

• economic

• unlimited

Two factors involved in determining the value of a resource, good, or service are

• productivity and opportunity costs

• availability and demand