Chapter 1 Review Module

In what type of economy does the government decide how economic resources will be allocated?

A centrally planned economy

According to the rationality assumption, people:

Do not intentionally make decisions that would leave them worse off.

Tangible products like cars and televisions are referred to as __________

goods

What can you not understand from macroeconomics

how a consumer decides between the purchase of two different cars

Economics is concerned with:

how people respond to incentives

The resources provided by nature to produce goods and services are also known as:

natural resources

Jim declined to take part in a health study on a free basis but changed his mind after being offered $1,000 to participate in the study. Jim's behavior best illustrates which economic principle?

people respond to economic incentives

Economics is the study of choice under conditions of:

scarcity

When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?

A market

What is an example of a country that has an economy where most of the resource allocation is determined by a central planning authority?

North Korea

One of the first steps in deciding whether to complete your education is to:

evaluate the marginal cost and marginal benefit of that decision

What is the name given to the development of a new good?

invention

The principle of opportunity cost evolves from the concept of:

scarcity

What is not a possible opportunity cost of attending college?

the cost of housing