Eco CH 1

A study of the impact of various government policies on economic growth would be considered:

macroeconomics

The study of individual choice and its implications for the behavior of prices and quantities in individual markets is:

microeconomics

The marginal cost of an activity is the:

change in the total cost of the activity that results from carrying out an additional unit of the activity.

Economics is best defined as the study of:

how people make choices in the face of scarcity and the implications of those choices for society as a whole.

The extra cost that results from carrying out one additional unit of an activity is the _____ of the activity.

marginal cost

The Cost-Benefit Principle indicates that an action should be taken if:

its extra benefit is greater than or equal to its extra cost.

In deciding how many guitars to buy for his shop before the Christmas season, Mark is making a(n) ______ decision.

microeconomic

Macroeconomics differs from microeconomics in that macroeconomics focuses on

the performance of national economies and ways to improve that performance.

Economists use abstract models because:

they are useful for describing general patterns of behavior.

Economists recognize that because people have limited resources:

they have to make trade-offs.

The Scarcity Principle states that:

with limited resources, having more of one thing means having less of another.

The economic surplus of an action is:

the difference between the benefit and the cost of taking an action.

Choosing to study for an exam until the extra benefit (e.g., improved score) equals the extra cost (e.g., the value of foregone activities) is:

an application of the Cost-Benefit Principle.

The opportunity cost of an activity includes the value of:

the next-best alternative that must be foregone.