Review-Ch. 1

Scarcity means that there is less of a good or resource available than people wish to have.

• True

• False

Economics is the study of how society allocates its unlimited resources

• True

• False

With careful planning, we can usually get something that we like without having to give up something

else that we like.

• True

• False

Efficiency means everyone in the economy should receive an equal share of the goods and services

produced.

• True

• False

Government policies that improve equality usually increase efficiency at the same time

• True

• False

The cost of an action is measured in terms of foregone opportunities

• True

• False

Trade allows each person to specialize in the activities he or she does best, thus increasing each

individual's productivity

• True

• False

The government can potentially improve market outcomes if market inequalities or market failure exists

• True

• False

In the long run the primary effect of increasing the quantity of money is higher prices

• True

• False

The phenomenon of scarcity stems from the fact that

• most economies’ production methods are not very good

• in most economies, wealthy people consume disproportionate quantities of goods and services

• governments restrict production of too many goods and services

• resources are limited