Macro Chapter 1 - Terms

What is the definition of economics?

• The study of weather patterns

• The study of how people choose to use resources

• The study of animal behavior

• The study of ancient civilizations

Which term describes a person who systematically and purposefully does the best they can to achieve their objectives?

• Rational person

• Economist

• Producer

• Consumer

What is economic surplus?

• The amount by which benefits exceed costs

• The total amount of money in circulation

• The difference between imports and exports

• The total value of all goods produced

What does opportunity cost refer to?

• The cost of producing one more unit

• The value of the next best alternative forgone

• The total cost of all resources used

• The price paid for a product

Which of the following best defines sunk cost?

• A cost that can be recovered

• A cost that has already been incurred and cannot be recovered

• The cost of future investments

• The cost of labor

Marginal cost is:

• The total cost of all units produced

• The cost of producing one additional unit of a good

• The cost of the first unit produced

• The average cost per unit

What is marginal benefit?

• The benefit received from consuming one more unit of a good or service

• The total benefit from all units consumed

• The benefit from the first unit only

• The average benefit per unit

Which of the following is a normative economic principle?

• Unemployment rate is 5%

• The government should reduce taxes

• Inflation increased by 2%

• GDP grew by 3%

A positive economic principle is:

• A statement about what ought to be

• A statement that can be tested and validated

• A personal opinion

• A moral judgment

Microeconomics is the study of:

• The economy as a whole

• Individual markets and decision-makers

• International trade only

• Government policies