TEST BANK For Microeconomics, 9th Edition by Jeffrey
M. Perloff
Specialization - ANSWER:The concentration of productive efforts of individuals and
businesses on a limited number of activities. The division of labor - like an assembly
line.
Factors of Production - ANSWER:The resources that are used to make goods and
services.
Land - ANSWER:One of the factors of production. All natural resources used to
produce goods & services.
Labor - ANSWER:The effort people devote to tasks for which they are paid.
Capital - ANSWER:Any human-made resource that is used to produce other goods
and services.
Physical Capital - ANSWER:All human-made goods that are used to produce other
goods & services (tools & buildings)
Human Capital - ANSWER:Skills & knowledge gained by a worker through education
& experience.
Trade-off - ANSWER:The alternatives that we give up when we choose one course of
action over another.
Cost-Benefit analysis - ANSWER:Economic model that compares the costs and
benefits of a decision.
Economic systems - ANSWER:The structure of methods and principles that a society
uses to produce and distribute goods and services.
Traditional Economy - ANSWER:An economic system that relies in on habit, custom,
or ritual to decide the three key economic questions.
Command Economy/Centrally Planned Economy - ANSWER:An economic system in
which the government controls a country's economy and makes all economic
decisions on the three key economic questions.
Market Economy - ANSWER:A market economy is an economy in which decisions
regarding investment, production, and distribution are based on supply and demand,
and prices of goods and services are determined in a free price system.
, Mixed Economy - ANSWER:A market-based system in which the government is
involved to some extent.
Scarcity - ANSWER:The principal that limited amounts of goods and services to meet
unlimited wants.
Microeconomics - ANSWER:Study of a single factor of an economy - such as
individuals, households, businesses, & industries - rather than an economy as a
whole.
Macroeconomics - ANSWER:The study of the economic behavior and decisions in a
nation's whole economy.
Self Interest - ANSWER:An individual's own personal gain.
Invisible Hand of the Market - ANSWER:A term coined by Adam Smith to describe
the self-regulating nature of the marketplace.
Efficiency - ANSWER:Using resources in such a way as to maximize the output of
goods and services.
Three Basic Economic Questions - ANSWER:what should be produced? how it should
be produced? and for whom should it be produced?
Communism - ANSWER:a political system in which the government owns and
controls all resources and means of production and makes all economic decisions.
Capitalism - ANSWER:An economic and political system supported by Adam Smith, in
which a country's trade and industry are controlled by private owners for profit. This
is an example of a market economy.
Adam Smith - ANSWER:Known as the "Father of Capitalism". Published The Wealth
of Nations in 1776.
Entrepreneur - ANSWER:A person that decides how to combine resources to create
goods and services.
Economics - ANSWER:The study of how people seek to satisfy their needs and wants
by making choices.
Gross Domestic Product - ANSWER:The dollar value of all final goods and services
produced within a countries borders given a year.
Incentive - ANSWER:The hope of reward or fear of penalty that encourages a person
to behave in a certain way.
Profit - ANSWER:The amount of money a business receives in excess of its expenses.
M. Perloff
Specialization - ANSWER:The concentration of productive efforts of individuals and
businesses on a limited number of activities. The division of labor - like an assembly
line.
Factors of Production - ANSWER:The resources that are used to make goods and
services.
Land - ANSWER:One of the factors of production. All natural resources used to
produce goods & services.
Labor - ANSWER:The effort people devote to tasks for which they are paid.
Capital - ANSWER:Any human-made resource that is used to produce other goods
and services.
Physical Capital - ANSWER:All human-made goods that are used to produce other
goods & services (tools & buildings)
Human Capital - ANSWER:Skills & knowledge gained by a worker through education
& experience.
Trade-off - ANSWER:The alternatives that we give up when we choose one course of
action over another.
Cost-Benefit analysis - ANSWER:Economic model that compares the costs and
benefits of a decision.
Economic systems - ANSWER:The structure of methods and principles that a society
uses to produce and distribute goods and services.
Traditional Economy - ANSWER:An economic system that relies in on habit, custom,
or ritual to decide the three key economic questions.
Command Economy/Centrally Planned Economy - ANSWER:An economic system in
which the government controls a country's economy and makes all economic
decisions on the three key economic questions.
Market Economy - ANSWER:A market economy is an economy in which decisions
regarding investment, production, and distribution are based on supply and demand,
and prices of goods and services are determined in a free price system.
, Mixed Economy - ANSWER:A market-based system in which the government is
involved to some extent.
Scarcity - ANSWER:The principal that limited amounts of goods and services to meet
unlimited wants.
Microeconomics - ANSWER:Study of a single factor of an economy - such as
individuals, households, businesses, & industries - rather than an economy as a
whole.
Macroeconomics - ANSWER:The study of the economic behavior and decisions in a
nation's whole economy.
Self Interest - ANSWER:An individual's own personal gain.
Invisible Hand of the Market - ANSWER:A term coined by Adam Smith to describe
the self-regulating nature of the marketplace.
Efficiency - ANSWER:Using resources in such a way as to maximize the output of
goods and services.
Three Basic Economic Questions - ANSWER:what should be produced? how it should
be produced? and for whom should it be produced?
Communism - ANSWER:a political system in which the government owns and
controls all resources and means of production and makes all economic decisions.
Capitalism - ANSWER:An economic and political system supported by Adam Smith, in
which a country's trade and industry are controlled by private owners for profit. This
is an example of a market economy.
Adam Smith - ANSWER:Known as the "Father of Capitalism". Published The Wealth
of Nations in 1776.
Entrepreneur - ANSWER:A person that decides how to combine resources to create
goods and services.
Economics - ANSWER:The study of how people seek to satisfy their needs and wants
by making choices.
Gross Domestic Product - ANSWER:The dollar value of all final goods and services
produced within a countries borders given a year.
Incentive - ANSWER:The hope of reward or fear of penalty that encourages a person
to behave in a certain way.
Profit - ANSWER:The amount of money a business receives in excess of its expenses.
