Two Week Review -- 2025 Micro CTY Session 1

What is economics? 

• Economics is the study of how society manages its scarce resources  

• Economics the study of how people and societies make choices to allocate limited resources to satisfy our unlimited needs and wants  

• Economics is the art of making the most out of life 

• Only about money 

Economics deals primarily with the concept of: 

• scarcity 

• money 

• poverty 

• banking 

What is microeconomics? 

• How households and firms make decisions 

• How individual markets make up the economy as a whole  

• How households and firms compete with one another 

• How individual markets become tiny 

Which of the following best defines a positive statement? 

• A statement that reflects an individual's personal opinion or belief about how things should be. 

• A statement that cannot be tested or proven true or false. 

• A statement that describes the world as it is and can be tested or verified. 

• A statement that includes moral judgments or policy recommendations. 

What is an opportunity cost? 

• The act of making a choice between two or more options 

• The value of the next best alternative that is forgone when a choice is made 

• The dollar amount of how much it costs to produce a good or service 

• Nothing

Select all that apply: What are three common economic tradeoffs? 

• Equity and efficiency 

• Income and environment 

• Goods/services and military 

• Supply and demand 

Rational people make a decision when... 

• Marginal benefit > marginal cost 

• Marginal cost > marginal benefit 

• Marginal benefit ≥ marginal cost 

• Marginal cost ≥ marginal benefit 

Señor Juakka decides to spend 2 hours studying instead of going to the movies with his friends. What is the opportunity cost of his decision? 

• The cost of the movie ticket 

• The 2 hours of studying 

• The enjoyment she would have gotten from the movie 

• The grade she earns on her test 

What is an incentive? 

• A cost or benefit that affects a third party who is not directly involved in the production or consumption of a good or service 

• The next best option 

• Something that induces a person to act (rewards or penalties for our choices)  

• An assumption that economic models use 

Which of the following describes comparative advantage? 

• The ability to produce a good or service using fewer resources 

• The ability to produce a good or service at a lower opportunity cost 

• The ability to entice the most amount of consumers 

• The ability to make the coolest product in the market