econ ch 1

After eating three slices of pizza, you decide to eat one more piece. Your decision is an example of the economic principle called:

marginal decision making

economic growth

the growing ability of the economy to produce goods and services

A friend comes up to you and offers you a free ticket to a professional baseball gamethat night. You decide to attend the game. The game takes five hours and costs you $15for transportation. If you had not attended the game, you would have worked at yourpart-time job for $8 an hour. What is the cost to you of attending the game?

$55

market economy

An economy in which decisions about production and consumption are made by individual producers and consumers.

When a factory closes, why does it spell bad news for the local restaurants?

Unemployed factory workers have lower incomes and are less likely to dine out.

recession

a downturn in the economy

economy

a system for coordinating society's productive activities

resource

anything that can be used to produce something else

If resources are scarce, it means that they:

are insufficient to provide enough goods and services to satisfy all human material wants and needs.

A choice made _____ is a choice whether to do a little more or a little less of something.

at the margin

A resource is anything that:

can be used in production

1

choices are necessary because choices are scarce

You are analyzing a trade-off when you compare the _____ and _____ of doing something.

costs; benefits

When markets don't achieve efficiency:

government may intervene to improve society's welfare.

Market failure occurs when:

individual actions have side effects that are not properly taken into account.

Microeconomics deals with:

individual decision makers in the economy

If government decided to increase taxes or decrease its spending, most likely this was to correct:

inflation

Some baseball fans leave the game in the seventh or eighth inning to avoid the postgametraffic. The fans are:

making a marginal decision by comparing the cost of leaving early to the benefit of leaving early

Marginal analysis:

refers to decisions about whether to do a bit more or a bit less of an activity.

invisible hand

refers to the way in which the individual pursuit of self-interest can lead to good results for society as a whole

Gains from trade arise because of:

specialization in production

Macroeconomics

the branch of economics that is concerned with overall ups and downs in the economy

Microeconomics

the branch of economics that studies how people make decisions and how these decisions interact

individual choice

the decision by an individual of what to do, which necessarily involves a decision of what not to do

Economics

the social science that studies the production, distribution, and consumption of goods and services

Opportunity cost is:

the value of the best alternative forgone in making any choice

Macroeconomics deals with:

the working of the entire economy or large sectors of it.

if a market is in disequilibrium:

there are opportunities for people to make themselves better off

For a student who owns his or her own home and doesn't plan to live in the dorm, the cost of going to college is:

tuition, the cost of books, and forgone income.

Because people usually exploit opportunities to make themselves better off, if the priceof gasoline rises and stays high for an extended period, we expect people to:

use more public transportation

Marla will make $10 by tutoring for an additional hour, but she will lose an hour ofstudying for her economics test. Marla decides to study rather than tutor. Marla's choiceindicates that she:

values an additional hour of studying more than the $10 she would earn tutoring.

market failure

when the individual pursuit of self-interest leads to bad results for society as a whole

scarce

when there is not enough of the resource available to satisfy all the various ways a society wants to use it then the resource is...