Econ Unit 1 Quiz: Intro to Economics

What does economics study?

• How to spend money wisely

• How societies allocate limited resources to satisfy unlimited wants and needs

• How to maximize profits

• How to create new resources

What is scarcity in economics?

• Having an abundance of resources

• When wants and needs are limited

• The central concept in economics where resources are limited while wants and needs are unlimited

• A situation where there are no trade-offs

What is opportunity cost?

• The total cost of a decision

• The cost of choosing the most expensive option

• The value of the next best alternative sacrificed when making a choice

• The cost of production

What is the role of incentives in economics?

• They have no impact on economic behavior

• They only influence businesses, not individuals

• They motivate individuals and businesses to take certain actions

• They are irrelevant to decision-making

Penalties or costs that make people not want to do something.

• Indirect Incentives

• Negative Incentives

• Positive Thinking

• Positive Incentives

Match the following

• Supply

• How much stuff people want to buy at different prices.

• Market Prices

• When you choose one thing, you give up something else.

• Demand

• How much stuff producers are willing to sell at different prices.

• Trade-offs

• Things that push people or businesses to take certain actions.

• Incentives

• How much people are willing to pay for something based on supply and demand.

Define scarcity in your own words.

Explain the concept of opportunity cost.

How does supply and demand affect market prices and quantities?