What is Economics?

Which of the following is a positive economic statement?

• The number of people in the workforce increased every year

• Unemployment should decrease next year

• A war in the Middle East should jumpstart the economy

Which scenario would lead to a sunk cost?

• going out on a weekend instead of doing your homework

• waiting in one line at the movies and then switching lines when a new window opens

• getting a job that pays minimum wage

• investing in the stock market

Which of the following is a scarce resource?

• the number of radios sold in the U.S.

• radio waves transmitted into the atmosphere

• the labor needed to produce radios

Which of the following is an example of a capital good?

• cattle

• saw

• celery

Which of the following would not be a topic for study by macroeconomists?

• how the stock market affected US unemployment rates last year

• how an increase in the interest rate affected investment last quarter

• how war impacts the unemployment rate

• the market for designer jeans

What do economic theories do?

• determine how the economy will behave in the year to come

• influence how goods and services are produced

• make predictions about the economy

• completely explain in detail why certain trends occur

If you decide to study for an upcoming test instead of going to the movies, what must you take into account?

• sunk cost

• economic theory

• opportunity cost

• scarcity

Which of the following is an example of a market?

• a craft fair

• a house

• a tax preparation business

• the labor force

What drives people to make economic decisions?

• concern for the environment

• rational self-interest

• concerns about scarcity

• the economic problems of other countries

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

• labor

• macroeconomics

• economics

• scarcity