AP Microeconomics Chapter 1 Review questions with correct answers

Our wants are ___ and our resources are ___. CORRECT ANSWER limitless, scarce What is economics? CORRECT ANSWER the science of scarcity; Social Science concerned with the efficient use of scarce resources to achieve maximum satisfaction of economic wants Economics is the study of ___. CORRECT ANSWER choices What is scarcity? What must we do about it? CORRECT ANSWER we have unlimited wants, but limited resources; we must make choices MICROeconomics CORRECT ANSWER the study of small economic units such as individuals, firms, and industries (ex. supply and demand in specific markets, production costs, labor markets, etc.) MACROeconomics CORRECT ANSWER the study of the large economy as a whole or economic aggregates (ex. economic growth, government spending, inflation, unemployment, international trade etc.) Theoretical economies CORRECT ANSWER Economists use the scientific method to make generalizations and abstractions to develop theories. Policy economies CORRECT ANSWER These theories are then applied to fix problems or meet economic goals. Positive statement CORRECT ANSWER