The Basics of Economics

Topics: Economics, Opportunity cost, Goods Pages: 2 (646 words) Published: April 15, 2013
In each of the following identify which of the economic principle(s) (see below) is at work. a. You pick the shortest line at the store checkout. g. People respond to incentives. b. The price of new textbooks increased so you buy the used textbook. e. Markets are a good way to organize economic activity. c. You decide to watch the Olympics rather than study for this test. b. The cost of something is what you must give up to get it. d. You help your friend with economics, he helps you with philosophy. d. Trade can make everyone better off. e. The Food and Drug Administration rejected the unsafe product. f. Governments can sometimes improve market outcomes. f. Opening trade with China lowered the domestic price of textiles. h. A country’s standard of living depends on its ability to produce goods and services. g. A fish vendor has to lower the price to sell off the excess inventory. c. Rational people think at the margin. i. As a result of an increase in households, rents rise. a. Resources are scarce

Match following concepts to definitions below:

Change in demand

a. The scientific study of "what is" in economics. 2.Positive economics. b. Statements about "what should be" that are not refutable by appeal to facts. 4.Normative economics. c. This is the study of behavior of individuals (individual households, individual firms, individual decision-making units), how individuals and firms decide what to purchase and what to produce. 3.Microeconomics d. Anything that can be used to produce something else. 1.Capital resources e. What you must give up to get it. 5.Opportunity costs.

f. No individual would be better off without another being worse off. 7. Efficiency h. There is no tendency for change. 6.Equilibrium.
h. Trade-offs facing an economy that produces only two goods showing the quantity of one good that can be produced with available resources and technology for any given production of the other. 8. Production possibility...
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