ECN 212 Practice Questions with 100%
Correct Answers
incentives
rewards and penalties that motivate behavior
-focus on what will entice them to do something (cause and effect)
good institutions align __ with __
self-interests with social interest
we cannot buy everything, which forces us to
ration our spending
we cannot do everything we want, which forces us to
ration our time
scarcity
the availability of resources is insufficient for individuals to satisfy all desires at zero price
*forces us to make decisions and choose among available alternatives
absence of scarcity
implies that all of our desires for goods are fully satisfied
price
used to ration goods and resources in a market setting
market organization (capitalism)
a method of organization that allows for unregulated prices and the decentralized decisions of
private property owners to resolve the basic economic problems
, market
the interaction between all of the potential buyers and sellers of good or service
economize
individuals _______, meaning they gain a specific benefit at the least possible cost
rational behavior
behavior is based on a careful, deliberate process that
weighs expected benefits and costs.
People do not make decisions that
make themselves worse of.
subjective
the value of goods is _____, meaning that goods (and services) are appreciated in very
different ways by different people
Information
______ is helpful but not free
the process of gathering it is not costless;
it is scarce
opportunity cost
requires us to look at the full cost of making choices, including the value of the next best
alternative.
explicit costs
money used in the pursuit of a goal that could otherwise have been spent on an alternative
objective.
Correct Answers
incentives
rewards and penalties that motivate behavior
-focus on what will entice them to do something (cause and effect)
good institutions align __ with __
self-interests with social interest
we cannot buy everything, which forces us to
ration our spending
we cannot do everything we want, which forces us to
ration our time
scarcity
the availability of resources is insufficient for individuals to satisfy all desires at zero price
*forces us to make decisions and choose among available alternatives
absence of scarcity
implies that all of our desires for goods are fully satisfied
price
used to ration goods and resources in a market setting
market organization (capitalism)
a method of organization that allows for unregulated prices and the decentralized decisions of
private property owners to resolve the basic economic problems
, market
the interaction between all of the potential buyers and sellers of good or service
economize
individuals _______, meaning they gain a specific benefit at the least possible cost
rational behavior
behavior is based on a careful, deliberate process that
weighs expected benefits and costs.
People do not make decisions that
make themselves worse of.
subjective
the value of goods is _____, meaning that goods (and services) are appreciated in very
different ways by different people
Information
______ is helpful but not free
the process of gathering it is not costless;
it is scarce
opportunity cost
requires us to look at the full cost of making choices, including the value of the next best
alternative.
explicit costs
money used in the pursuit of a goal that could otherwise have been spent on an alternative
objective.
