Econ Module 1 Vocabulary

What is the study of how people choose to use resources?

• Economy
• Economics
• Scarcity
• Tradeoff

Which term describes the limited nature of society’s resources?

• Incentive
• Productivity
• Scarcity
• Goods

What is a tradeoff?

• The cost of the next best alternative
• The act of giving up one benefit in order to gain another
• The study of economic behavior
• The production of goods and services

Which of the following is an example of a positive economic statement?

• Unemployment is currently at 5%.
• The government should reduce taxes.
• Healthcare should be free for everyone.
• The minimum wage should be increased.

What is the purpose of a cost-benefit analysis?

• o determine the opportunity cost of a decision
• To compare the costs and benefits of a decision
• To measure the productivity of a business
• To evaluate the factors of production

Which term refers to the payment for the use of land, labor, and capital?

• Factor payment
• Incentive
• Productivity
• Economic equity

What is the production possibilities frontier (PPF)?

• A graph that shows the maximum possible output of an economy
• A measure of economic equity
• A type of economic system
• A method of cost-benefit analysis

Which economic system relies on customs and traditions to make economic decisions?

• Command economy
• Market economy
• Traditional economy
• Mixed economy

What is the main characteristic of a command economy?

• Decisions are made by individual consumers and producers.
• The government makes all economic decisions.
• Economic decisions are based on customs and traditions.
• There is a combination of government and market-based decisions.

Which of the following is an example of a normative economic statement?

• The inflation rate is 3%
• The government should provide free education.
• The GDP grew by 2% last year.
• The unemployment rate is 4%.