IB Economics Unit 1 Quiz #1-Questions and Answers Graded A+

IB Economics Unit 1 Quiz #1-Questions and Answers Graded A+ Economics is the study of - ANSWER-choices Economics is the science of - ANSWER-scarcity Scarcity - ANSWER-we have unlimited wants but limited resources Economics is a social science concerned with: - ANSWER-the efficient use of scarce resources to achieve the maximum satisfaction of economic wants Microeconomics vs. Macroeconomics - ANSWER-Micro- Study of econ on a smaller scale (personal(specific) / local) Macro- Study of econ on a large scale (nations / world) 5 key economic assumptions - ANSWER-1. Society has unlimited wants and limited resources (scarcity). 2. Due to scarcity, choices must be made. Every choice has a cost (a trade-off). 3. Everyone's goal is to make choices that maximize their satisfaction. Everyone acts in their own "self-interest." 4. Everyone makes decisions by comparing the marginal costs and marginal benefits of every choice. 5. Real-life situations can be explained and analyzed through simplified models and graphs. Positive vs. Normative - ANSWER-what is (facts) vs what ought to be (value judgement) Marginal - ANSWER-additional marginal analysis - ANSWER-making decisions based on increments marginal cost vs marginal benefit - ANSWER-Cost of a good vs. it's usefulness in your life. Ex: Price of sunroof vs. usefulness in Louisiana. Trade-offs - ANSWER-ALL the alternatives that we give up when we make a choice. opportunity cost - ANSWER-most desirable alternative given up when you make a choice (2nd Best Choice)