ECO 2023 Test 1 Review: Study Guide Question and Answer 2023
What is economics? - the social science that studies the choices that individuals, businesses, governments, and entire societies make as they cope with scarcity, the influences on those choices, and the arrangements that coordinate them. What are the kinds of choices economists try to answer? - What, how, and for whom What is self-interest? - the choices that people make that they think are the best for them What is social interest? - the choices that are best for society as a whole What is microeconomics? - the study of the choices that individuals and businesses make and the way these choices interact and are influenced by government What does the "what" question deal with? - quantity What does the "how" question deal with? - production What does the "for whom" question deal with? - consumers What is the characteristic from which all economic problems arise? - scarcity What does scarcity mean to economists? - unlimited wants cannot be satisfied by the limited resources What is rational choice? - a choice that compares the marginal benefit and marginal cost of the activity and takes the action if the marginal benefit exceeds or equals the marginal cost What is a positive statement? - a statement that tells what is currently believed about the way the world operates; can be tested What is a normative statement? - a statement that tells what ought to be; depends on values and cannot be tested
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