Week 1 and 2
Scarcity is central to the study of economics because it implies that
Every choice involves an opportunity cost
What do economists mean by the word "marginal"?
Extra or additional
Economic Growth i
Happens when more economic resources (primarily capital and labor) become available and technology advances
Microeconomics is the study of
How households and firms make choices, how they interact in markets, and how the government attempts to influence their choices
Economy's growth rate
The percentage change in real GDP from one year to the next
Economics
The study of the choices people make to attain their goals, given their scarce resources
Economists assume that people are rational in the sense that
They use all available information as they take actions intended to achieve their goals.
A Production Possibilities Frontier (PPF) is
A curve showing the maximum attainable combinations of two products that may be produces with available resources and current technology
The basis for trade is
Comparative advantage
Economists assume that the only reason people take the actions they do is in response to economic incentives
False
A primary difference between macroeconomics and microeconomics is
Microeconomics examines individual markets while macroeconomics examines the economy as a whole
One of the great benefits of trade is
That it makes it possible for society to become better off by increasing both its production and its consumption
Comparative advantage
The ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors.
Absolute advantage
The ability of an individual, a firm, or a country to produce more of a good or service than competitors, using the same amount of resources.
Macroeconomics is the study of
The economy as a whole, including topics such as inflation, unemployment, and economic growth
Economists believe that an activity should be continued up to the point where
The marginal benefit from the activity is equal to the marginal cost
Scarcity
Unlimited wants exceed the limited resources available
