Economic Basics

What is economics?

• The study of how people seek to satisfy their needs and wants by making choices

• The study of how people produce and consume goods and services

• The study of how people save and invest their money

• The study of how people interact in social and economic systems

What does macroeconomics examine?

• The decision-making process of firms and households

• The impact of government policies on the economy

• Changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels

• Market behavior of individual consumers and firms

What does microeconomics analyze?

• The impact of government policies on the economy

• Changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels

• Market behavior of individual consumers and firms

• The decision-making process of firms and households

What is a need?

• Something that is necessary for survival

• The most desirable alternative given up as the result of a decision

• An item that we desire but is not essential to survival

• A situation in which a good or service is unavailable

What is a want?

• An item that we desire but is not essential to survival

• The most desirable alternative given up as the result of a decision

• Something that is necessary for survival

• A situation in which a good or service is unavailable

What is scarcity?

• The idea that quantities of resources are limited to meet the unlimited wants of humans

• A situation in which a good or service is unavailable

• The most desirable alternative given up as the result of a decision

• The study of how people seek to satisfy their needs and wants by making choices

What is a shortage?

• The most desirable alternative given up as the result of a decision

• The idea that quantities of resources are limited to meet the unlimited wants of humans

• A situation in which a good or service is unavailable

• The study of how people seek to satisfy their needs and wants by making choices

What are the four factors of production?

• Labor, Capital, Entrepreneurs, Natural Resources

• Land, Labor, Capital, Entrepreneurs

• Land, Labor, Capital, Technology

• Labor, Capital, Entrepreneurs, Technology

What is a trade-off?

• A situation in which a good or service is unavailable

• The study of how people seek to satisfy their needs and wants by making choices

• The most desirable alternative given up as the result of a decision

• Alternatives that we sacrifice when we make a decision

What is an opportunity cost?

• The most desirable alternative given up as the result of a decision

• Alternatives that we sacrifice when we make a decision

• The study of how people seek to satisfy their needs and wants by making choices

• A situation in which a good or service is unavailable