ECON 200, Fundamentals Recharge

When someone compares marginal benefits associated with an acitivity to its marginal costs, that person is making a _________ decision.

marginal

Marginal benefit is:

the additional benefit associated with one more unit of an activity

When people specialize according to their comparative advantages: overall production falls the opportunity cost is reduces the opportunity cost is eliminated overall production rises

the opportunity cost is reduced. overall production rises.

terms of trade

the price of one good, service, or resource, in terms of another

Macroeconomics

the study of the economy at the large-scale level, examining total output, the price level, and other aggregate measures in the economy.

Microeconomics

the study of the economy at the small-scale level, examining individuals and specific markets

Someone who is self-interested only performs actions for his or her own benefit and not for the benefit of others.

False

Four Fundamental Questions

What, How, Who, How

market system

capitalism; private ownership of resources

four resources

land, labor, capital, and entrepreneurial ability

With increased activity, marginal benefit tends to ______, and marginal cost tends to ______.

fall; rise

As the amount of an activity increases, its marginal cost:

increases

The value of the next-best, forgone alternative is the

opportunity cost

When marginal benefit equals marginal cost, the market has reached an _______ level.

optimal

Capital is sometimes divided into __ capital and ___ capital.

physical and human

Machines designed to improve future productivity is a type of: physical capital natural resource renewable resource human capital

physical capital

Self-interest, marginal decision making, and optimization form the basis for:

rational decision making

The comparison of the scarcity of one good, service, or resource to that of another is called _____________scarcity.

relative

Tomatoes represent a small subset of food, so tomatoes are: relatively more scarce than food in general. relatively less scarce than food in general. as abundant as food in general. as scarce as food in general.

relatively more scarce than food in general

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

scarce

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

scarcity

command system

socialism/communism; government ownership

The marginal cost of an activity can be found by calculating the change in: total benefits of the entire activity. total benefits as the level of the activity increases by one unit. total costs as the level of the activity increases by one unit. total costs of the entire activity

total costs as the level of the activity increases by one unit.