Econ Ch. 1 Quiz
True of False? Economists would likely agree that Resources and inputs used in production are unlimited.
False
Exchanges taking place in a market system:
are voluntary
Most individuals choose careers in which they specialize in producing only one type of good or service, yet as consumers they have access to a wide variety of goods and services. What principle allows for this?
Trade
An economy is ________ if it has exploited all opportunities to benefit someone without making anyone else worse off.
efficient
An economic system is in ________ when no individual would be better off by making a different choice.
equilibrium
Macroeconomics is the branch of economics studying...
fluctuations in the overall level of business activity
The focal point of economic inquiry is
individual choice
After finishing high school, LeBron James decided to enter the NBA rather that going to college to begin his studies to become a doctor. This choice between the two careers can best be described by:
opportunity cost
Market failure results in
the pursuit of individual self-interest leads to bad results for society as a whole.
True or False? In a market economy productive resources are scarce, every choice involves an opportunity cost, and people will respond to incentives.
True
True or False? People usually exploit opportunities to make themselves better off.
True
The purpose of an economic system is to:
allocate scarce resources
Economists generally agree that people are most likely to change their behavior when they:
are given incentives to do so.
Adam Smith used the idea of the invisible hand to refer to the ability of market economies to:
harness the power of individual self-interest for the good of society as a whole.
The condition of scarcity means that:
must be made in the allocation of productive resources.
An equilibrium outcome is one in which
no one has as incentive to change his or her decisions or behavior
In his book The Wealth of Nations, Adam Smith used the example of pin-making to illustrate the advantages of:
specialization
If market failures exist, it becomes more economically efficient for:
the government to intervene to improve society's welfare.
An opportunity cost arises:
whenever any choice is made.
theory asserts that people will behave in ways that
will enhance their own overall well-being.