midterm

Question 1

economics

Answer 1

is the science of scarcity

Question 2

what is scarcity

Answer 2

we have unlimited wants but limited resources

Question 3

micro

Answer 3

study of small economic units ex. firms

Question 4

macro

Answer 4

study of the large economy as a whole

ex. inflation or unemployment

Question 5

trade off

Answer 5

all the alternatives that we give up when we make a choice

Question 6

opportunity cost

Answer 6

most desirable alternative given up when you make a choice

Question 7

5 keys economic assumptions

Answer 7

1. scarcity
2. trade off
3. everyone responds to incentives and acts in their own self interest
4. Everyone makes decisions by comparing the marginal costs and marginal benefits
5. Real life situations can be explained and analyzed through simplified models and graphs