unit 1 multiple choice questions

Provide an example of thinking at the margin

john has six shirts and is trying to decide whether to buy a seventh

List the factors of production

land, labor and capital

Provide an example for the law of diminishing marginal utility

a new toy is less exciting to a child with many toys then to one with few

Example of specialization

an assistance in tailoring shop only replaces zippers

What is a market?

an online auction site

What is the law of unintended consequences?

actions often have unforeseen effects

What is an opportunity cost?

biggest loss in a gain

What type of economic system is most common today?

mixed economy

Why are economies most efficient when they have full employment?

no productive resources are going unused

Explain the cost vs. benefits principle

people choose something when its expected costs are less than its anticipated benefits

Why do we have scarcity?

peoples wants are unlimited while resources are limited

Describe how government best fulfills its role in model free enterprise economy

protect property rights and enforce contracts

Why are tradeoffs necessary?

resources are limited

What term is most closely related to tradeoffs?

scaricty

Using the circular flow model, provide an example of a factor payment

the hourly wage a store pays to a clerk

What are the THREE fundamental economic questions?

what, how and whom