ECON 222-001 Chapter 1
Which of the following best describes scarcity?
Unlimited wants exceed the limited resources available
Product efficiency means that
A good or service is produced at the lowest possible cost
Their income.
A market system prevents people from getting as many goods and services as they want due to
maximizes benefits to society
Efficiency means that goods are distributed in a way that
fair
Equity means that goods are distribute in a way that is
Allocative efficiency means that
Every good or service is produced up to the point where marginal benefit equals marginal cost.
Economists assume that people are rational in the sense that,
They use all available information as they take actions intended to achieve their goals.
Scarcity is central to the study of economics because it implies that
every choice involves an opportunity cost.
Positive analysis
is concerned with "what is"
Normative analysis
is concerned with "what ought to be"
positive analysis
measures the costs and benefits of different courses of action
Allocative efficiency
occurs when production is in accordance with customer preference
Economics is about
positive analysis
Economic data is used to
test models
Equity is
the fair distribution of economic benefits
Opportunity cost is
the highest valued alternative that must be given up to engage in an activity.