test 1 - 1. Economics is the study of the choices that we...

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1. Economics is the study of the choices that we make in the allocation of scarce resources. 2. In choosing whether or not to go to a particular concert . .. if the marginal benefit (marginal utility) gained is greater than the marginal cost, then it would be “rational” to go. 3. A real cost of choosing to attend a concert is not only the out-of-pocket $ $ $ cost, but also the opportunity (lost wages or maybe extra sleep). Every activity we undertake requires us to not pursue other opportunities. 4. Inflation is when more money is paid for the same amount of goods and services than in a previous time period. 5. In the Resource (or Factor) Markets of the Circular Flow model, Households provide Entrepreneurship to the Business sector in exchange for Profits. 6. In the Product Markets of the Circular Flow model, Households provide Consumption Spending (or Revenues) to the Business sector in exchange for Goods and Services. 7. Over a reasonable period of time a nation must choose to balance its trade within the global markets in order to prosper. 8. Allocation is concerned with how we choose to use our scarce resources on a limited variety of projects. 9. Stability is the goal of economics seeking to allocate resources so that an economy does not experience high inflation. 10. Critical reasoning in economics is an activity which considers alternative courses of
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This note was uploaded on 06/18/2011 for the course ECON 2301 taught by Professor Newbury during the Spring '10 term at Richland Community College.

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test 1 - 1. Economics is the study of the choices that we...

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