Econ- Review of week 1

Which of the following best captures the idea of the fundamental economic problem?

• Infinite resources and limited wants

• Unlimited resources and unlimited wants

• Limited resources and unlimited wants

• Lack of demand for limited resources

Answer explanation

The unlimited wants of humans results in the problem of scarcity, which any economic system must address.

What are the four scarce resources that any economic system must allocate between society's competing wants and needs?

• 
  Information technology, physical capital, financial capital, and high skilled workers

• Land resources, labor, capital goods, and entrepreneurship

• High skilled workers, low skilled workers, knowledge workers, and service sector workers

• 
  Forest, minerals, ocean, and energy resources

Answer explanation

Natural resources (land), workers (labor), technology (capital) and entrepreneurial ability are the four resources that any economic system must allocate

What is the best definition of economics?

• 
  The study of how governments make decisions regarding public policy

• 
  The study of financial markets and how to invest in stocks and other financial assets

• The study of human society

• The study of how society's scarce resources are allocated

Answer explanation

The fundamental question of economics is how societies deal with the problem of scarcity.

Any economic system must provide society with a means of making choices that answer three basic questions: what are they? Select all

• • How will we produce the things we need and want?

• • What will be produced with society’s limited resources?

• What cannot be produced because of a lack of competition?

• • How will society’s output be distributed?

Answer explanation

Any economic system must provide society with a means of making choices that answer three basic questions:

• What will be produced with society’s limited resources?

• How will we produce the things we need and want?

• How will society’s output be distributed?

What is.....some entity making a decision; this can be an individual, a household, a business, a city, or even the government of a country.

• economic agent

• consumer

• producer

• economic model

Answer explanation

Another assumption economists make is that economic agents are rational and have an incentive to make decisions that are always in their own self-interest.

Examples of ____________would be machinery, technology, and tools such as computers; hammers; factories; robots; trucks, and trains used to transport goods; and other equipment employed in the production of a good or service.

• land

• labor

• capital

• entrepreneurship

Answer explanation

Capital- Physical goods that are produced and used to produce other goods.

Not all costs are monetary costs.

• True

• False

Answer explanation

Opportunity costs are usually expressed in terms of how much of another good, service, or activity must be given up in order to pursue or produce another activity or good.