Economics H Chapter 1

sunk cost

A cost you have already paid and cannot recover, regardless of what you do now

Entrepreneur

A profit-seeker who develops a new product or process and assumes the risk of profit or loss

Marginal

A rational decision maker will change the status quo as long as the expected ____ benefit from the change exceeds the expected ____ cost

entrepreneur

A(n) _____?is a person who tries to earn a profit by dreaming up a new product or finding a better way to produce an existing one.

Capital Good

All human creations used to produce goods and services

Economic Theory

An ____ is a simplification of economic reality that is used to make predictions about the real world

Good

An item you can see, feel, and touch that requires scarce resources to produce and satisfies human wants

Your opportunity cost depends on your alternatives.

Does opportunity cost have the ability to vary?

Marginal

Incremental, additional, extra, or one more; refers to a change in economic variable, a change in the status quo

Natural Resources

So-called "gifts of nature" used to produce goods and services

Service

Something not physical that requires scarce resources to produce and satisfies human wants

The 10 minutes you waited represents a sunk cost, which is a cost you have already incurred and cannot recover, regardless of what you do now.

Suppose you have just finished shopping and are wheeling your shopping cart to the checkout. How do you decide which line to join? You pick the one you think will take less time. What if, after waiting 10 minutes in a line that barely moves, you notice a cashier has opened another line and invites you to check out. Do you switch to the open line, or do you think, "I've already spent 10 minutes in this line. I'm staying here"? What part of this paragraph represents the sunk cost?

Human Resources

The broad category of human efforts, both physical and mental, used to produce goods and services

productive resources

The inputs used to produce the goods and services that people want

Market

The means by which buyers and sellers carry out exchange

Economics

The study of how people use their scarce resources to satisfy their unlimited wants

Opportunity Cost

The value of the best alternative passed up for the chosen item or activity

False

The value of the opportunity cost of a particular choice is the same for all people

False

True or False Services are different from goods because they are not able to satisfy human desires.

True

True or False. Labor is a type of human resource.

True

True or False. Tutoring is an example of a service, not a good.

True

True or False. A bus station is an example of a capital good.

False

True or False. A good is free if it involves no apparent cost to you.

True

True or False. A productive resource is scarce if it is not freely available.

False

True or False. An exhaustible resource can be drawn upon indefinitely, as long as it is used wisely.

True

True or False. Because productive resources are scarce, goods and services are scarce, too.

False

True or False. Depending on the situation, an entrepreneur does not always need to assume the risk of success or failure in a business venture.

True

True or False. Goods and services are scarce.

True

True or False. Productive resources are defined as the inputs used to produce the goods and services that people want.

False

True or false: If you have nothing better to do when you make a choice, you pay no opportunity cost for your decision

True

True or false: In general, the assumption of rational self-interest means that individuals try to maximize the expected benefit achieved with a given cost

False

True or false: Most of the disagreement among economists involves debates over positive statements

True

True or false: Opportunity cost is the value of the best alternative that you pass up whenever you make a choice

True

True or false: Scarcity exists because our supplies of productive resources are limited

False

True or false: Services are different from goods because they are not able to satisfy human desires

False

True or false: The assumption of rational self-interest rules out concerns for others

True

True or false: The opportunity cost you would incur for cleaning your room would probably be different on Saturday evening than on Tuesday afternoon

False

True or false: When you play football in a public park you receive a free good because you do not pay to use the park

sunk costs

What costs do investors ignore because there is no way to save them?

The Mexican billionaire built his vast fortune largely in the telecommunications industry in Mexico and Latin America. Supported by his great wealth, Helú appears to have overcome the economic problem caused by scarcity.

What has Carlos Slim Helú worked in to gain immense wealth and what has it helped him to avoid?

You can think of opportunity cost as the opportunity lost.

What is another way to think of opportunity cost?

Scholarships, but not loans, would reduce your opportunity cost.

What is something that could reduce your opportunity cost for college?

"coulda, woulda, shoulda."

What is the expression used to express lost opportunities?

It is the value of the goods and services that money could have purchased otherwise.

What is the opportunity cost of paying for tuition, fees, and books for college?

On Saturday night, the opportunity cost of studying is higher because your alternatives are more attractive than they are on a Tuesday night when there's less to do.

What is the opportunity cost when you study on a Tuesday night rather than a Saturday night?

Profit

When a firm's revenue from sales exceeds its cost of production, it will earn a ____

profit

When a firm's revenue from sales exceeds its cost of production, it will earn a(n)_____?.

Consider only variables that interest them

When economists use the other - things - constant assumption they are trying to A. Consider only variables that interest them B. Duplicate reality in their ideas C. Establish economic laws that will last indefinitely D. Combine several ideas into one

The value of the pizza he would have bought if he had not gone to the movie

Which if the following is Aaron's opportunity cost of spending $8 to go to a movie with his friends? A. The value of the $8 he spent B. The value of the time he worked to earn the $8 C. The value of the enjoyment he received from seeing the movie D. The value of the pizza she would have bought if she had not gone to the movie

b. a bulldozer

Which is an example of a capital good? a. rainwater b. a bulldozer c. coal d. a cow

d. The study of how people use scarce resources to satisfy unlimited wants.

Which of the following accurately defines economics? a. The study of how people make money. b. The study of seeking profits and increasing resources. c. The study of the entrepreneur and his or her tactics. d. The study of how people use scarce resources to satisfy unlimited wants.

D. the value of the pizza she would have bought if she had not gone to the movie

Which of the following is Yo-chee's opportunity cost of spending $10 to go to a movie with her friends? A.the value of the $10 she spent B.the value of the time she worked to earn the $10 C.the value of the enjoyment she received from seeing the movie D.the value of the pizza she would have bought if she had not gone to the movie

b. deli meat

Which of the following is a good? a. dry cleaning b. deli meat c. a taxi ride d. advertising

Rose works too many hours each work to do well in school

Which of the following is a normative statement? A. On average, Rose works 30 hours a week B. Rose is paid $8.00 per hour for her labor C. Rose pays 7.65 percent of her earnings in Social Security tax D. Rose works too many hours each week to do well in school

a. wildlife

Which of the following is a renewable resource, if handled properly? a. wildlife b. oil c. copper ore d. coal

a. writing

Which of the following is a service? a. writing b. pens c. paper d. computer

The $30 monthly payment you already agreed to make to connect to the Internet

Which of the following is a sunk cost that should be ignored when you choose whether or not to buy a new computer over the Internet? A. The $50 delivery charge B. The $30 monthly payment you already agreed to make to connect to the Internet C. The extra $200 you might pay to get a flat-screen monitor D. The $150 two-year service contract you decide to buy

A tree standing in a forest

Which of the following is an example of a natural resource? A. Lumber used to build a house B. A tree standing in a forest C. A carpenter who installs new cabinets D. Gasoline in your car

Tyrone received a 5 percent raise in his wage from his employer last year

Which of the following is an example of microeconomics? A. Tyrone received a 5 percent raise in his wage from his employer last year B. On average, prices increased by 2.3 percent last year C. The federal government borrowed more than $100 billion last year D. Business invested 3.1 percent more last year than in the year before

Crude oil in the ground

Which of the following is an exhaustible resource? A. Crude oil in the ground B. Corn growing in a field C. Water in a river D. Fish in the ocean

c. anything that is free

Which of the following is not a subject of economics? a. the unemployment rate b. the stock market c. anything that is free d. the shoe industry

b. goods and services

Which of the following is not considered a productive resource? a. human resources b. goods and services c. natural resources d. capital resources

c. The productive resources needed to satisfy our unlimited wants are too scarce to do so.

Which of the following statements best describes the economic problem? a. Too many countries are still poor and need more productive resources. b. We have not discovered how to utilize all the productive resources available to us. c. The productive resources needed to satisfy our unlimited wants are too scarce to do so. d. The productive resources are unlimited so all wants and needs can be satisfied.

d. a person not willing to accept the risk of losing money

Which of the following statements does not define the term entrepreneur? a. a person who tries to earn a profit b. a person who develops a new product c. a person who improves an existing product d. a person not willing to accept the risk of losing money

Other uses of extra extra income earned because of the college education

Which of the following would not be a possible opportunity cost of attending college? A. Other uses of the money used to pay college tuition B. Other uses of the time used to study and attend classes C. Other uses of extra income earned because of the college education D. Other uses of the money used to pay for room and board while attending college

Positive

____ statements concern what is

C. Water

_________ is a natural resource. a. Labor b. A factory c. Water d. A truck