Review Unit 2 Concept 1

The study of __________________ traditionally assumes that individuals, businesses, and governments behave rationally when faced with choices.

• finances
• supply and demand
• goods and services
• economics

In economic terms, a ____________ _______________ is made when the marginal benefit of an action is greater than or equal to the marginal cost.

• opportunity cost
• rational decision
• positive incentive
• negative incentive

________________ in economics means per unit, incremental, or small changes.

• marginal
• utility
• incentive
• invisible hand

________________ is the total satisfaction gained from consuming/using a good or service.

• marginal
• utility
• incentive
• invisible hand

The interaction of market forces, in which buyers and sellers are motivated by self-interest, is called the ______________.

• marginal
• utility
• incentive
• invisible hand

_____________ _______________ is the change in total benefit received from one more unit; the change in total cost paid for one more unit is the ________________ __________.

• marginal cost; marginal benefit
• opportunity cost; marginal benefit
• marginal benefit; opportunity cost
• marginal benefit; marginal cost

This is the point where the total profit is maximized, and the person is getting the most out of the situation at the given moment....

• marginal benefit
• opportunity cost
• profit-maximizing rule
• Law of Diminishing Marginal Utility

An ________________ motivates individuals, businesses, and governments to undertake an action or avoid an action.

• utility
• invisible hand
• incentive
• profit

Incentives are _______________ when the option chosen is associated with a perceived benefit or gain.

• negative
• rational
• marginal
• positive

Incentives are _______________ when the option is avoided due to association with a high cost.

• negative
• rational
• marginal
• positive