MOD 1 The Study of Economics MAIN

Scarcity and choice are central to the study of economics because:

• resources are limited and people must make decisions about how to use them.

• there are unlimited resources for everyone to use freely.

• economics only studies money and not decision-making.

• choices are not affected by the availability of resources.

Opportunity cost is important in decision making because it:

• helps individuals evaluate the value of the next best alternative forgone

• ensures that all decisions lead to profit

• eliminates the need for making choices

• guarantees the best possible outcome every time

Microeconomic concepts focus on individual markets and agents, while macroeconomic concepts deal with the economy as a whole. Which of the following best distinguishes between microeconomic and macroeconomic concepts?

• Microeconomics studies individual markets; macroeconomics studies the entire economy.

• Microeconomics focuses on government policies; macroeconomics focuses on consumer choices.

• Microeconomics analyzes global trade; macroeconomics analyzes local businesses.

• Microeconomics examines inflation; macroeconomics examines supply and demand.

Positive economics deals with objective analysis and facts, while normative economics involves value judgments and opinions.

• Positive economics deals with objective analysis and facts, while normative economics involves value judgments and opinions.

• Positive economics is based on opinions, while normative economics is based on facts.

• Normative economics only studies past events, while positive economics predicts the future.

• Positive economics and normative economics are identical in their approach.

Areas of agreement and disagreement among economists can be identified as:

• Topics where economists share common views and topics where their opinions differ.

• Only the topics where economists disagree.

• Only the topics where economists agree.

• Areas unrelated to economics.

Economics is the study of _______ and choice.

• scarcity

• abundance

• technology

• mathematics

Individual choice is decisions by individuals about what to do, which necessarily involve decisions about what _______ to do.

• not

• always

• sometimes

• frequently

Which of the following best describes a market economy?

• A system where a central authority tells people what to produce and where to ship it.

• A system in which production and consumption are the result of decentralized decisions by many firms and individuals.

• A system where only the government makes economic decisions.

• A system where no choices are made by individuals.

In economics, individual choice refers to decisions by individuals about what to do and what not to do.

• True

• False

An _______ is a system for coordinating a society’s productive and consumptive activities.

• economy

• ecosystem

• government

• community