EC201 Fundamentals

The earliest 2 fundamental steps in learning the economic way of thinking are understanding what?

- How people make choices - How resources and scarcity affect the costs and benefits of choices

Phillip puts a down payment on his first new car, which he will pay for over the next 5 years

- Product Market - Consumption Expenditure

Sandra is a chiropractor who has just performed a treatment on Matt and received payment for it

- Product Market - Revenue

Larry is a self-employed attorney who sometimes does work for a software company; he has just been paid for his most recent work preparing and filling documents in court

- Resource Market - Income

Lisa loans $5,000 to her friend, Richard, which he is using to start his own webpage design business, working from home. He pays her interest each month

- Resource Market - Income

At the local town council, people debated a proposal that would change the use of public space for recreational use by demolishing a skating park and building an arboretum. This is known as the problem of what?

Allocating scarce resources

The quality of a ____________ model can be measured by how well it reflects reality and whether it gives us insights that can be used in the real world

Economic

______________ ability involves assuming risk and organizing resources into a productive process

Entrepreneurial

Economics studies how individuals and businesses make decisions in a world of _________________ resources

Limited

When you decide to turn off the bedroom light on your way to the kitchen so that you can save a little money on your electric bill, you are engaging in what?

Marginal decision making

When a decision maximizes overall benefit, it is called what?

Optimization

Each row of the tabular ______________ illustrates the maximum amount of a good or service that can be produced given the production of the other

Production possibilities schedule

Self-interest, marginal decisions, and optimization all form the basis of ______________ __________________ __________________

Rational decision making

In the circular flow model, firms can produce the output they sell to households only by buying ________________ from households

Resources

In the circular flow model, households can obtain the income they need to buy the products they want to consume only by selling their __________________, also known as factors of production

Resources

The term _______________ describes the fact that unlimited wants cannot be completely satisfied with limited resources

Scarcity

_______________-interest is the idea that people choose to do things that interest them

Self

Marginal benefit is

The additional benefit associated with one more unit of an activity

Increasing marginal cost describes

The direct relationship between the marginal cost associated with the use of a good or a service and the quantity produced

Opportunity cost is defined as

The value of the opportunity that you give up when you choose one activity instead of another

The marginal cost of an activity can be found by calculating the change in what?

Total costs as the level of activity increases by one unit

- California - Florida

Which state has the lower opportunity cost of producing strawberries? Which state has the lower opportunity cost of producing tangerines?