Principles of Economics Part 1

What does economics study?

• Human behavior in the face of scarcity

• The production of goods and services

• The distribution of wealth

• Fiscal policy

What is scarcity?

• The abundance of resources

• The condition that exists because there are not enough resources to satisfy everyone's wants

• The equitable distribution of resources

• The mass production of goods

What does microeconomics study?

• Individual decisions and their implications for specific markets

• The global economy

• Monetary policy

• Inflation

What does macroeconomics study?

• The global economy, such as growth and the maintenance of economic growth

• Individual decisions

• The production of goods

• The distribution of income

What is the cost-benefit principle?

• Evaluate the full set of costs and benefits associated with a choice

• Make decisions based on intuition

• Choose the cheapest option

• Avoid any cost

What is utility in economics?

• The total satisfaction received from a choice

• Opportunity cost

• Marginal benefit

• Marginal cost

What are incentives in economics?

• Factors that influence a person's behavior

• The cost of production

• Supply and demand

• Fiscal policy

What should your decision reflect when faced with a choice, according to the principle of opportunity cost?

• The opportunity cost

• The direct financial cost

• The production cost

• The marginal cost

What is opportunity cost?

Which principle suggests that quantity decisions should be made incrementally?

• Marginal principle

• Cost-benefit principle

• Interdependence principle

• Opportunity principle