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Economics Chapter 1: Test
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Economics Chapter 1: TestThe Scopes of Economics : 4 - Description, Analysis, Explanation, Prediction
Define Description in the Scope of Economics - the description of economic activity
Define Analysis in the Scope of Economics - helps us to discover why things work, and how
things happen
Define Explanation in the Scope of Economics - understanding how and why things work in the
economy, and sharing with others.
Define Prediction in the Scope of Economics - being able to know, or make an educated guess,
on how people's incomes are going to rise or fall in the future, affecting their spending habits in the
market place
What are the Four different classifications of Goods? - Consumer, Capital, Durable, and
Endurable
Define Consumer Goods - intended for the final use of the individuals
Define Capital Goods - manufactured goods are used to produce other goods, and services
Define Durable Goods - made to last, and be used for an extended period of time
Define Endurable Goods - Perishable goods, not build to withstand extended time periods
Why is scarcity not enough to create value? - because, you have to have a use for the item(s)
What is utility? - usefulness of (an) item(s)
, Define Paradox of Value - the situation where some necessities, such as water, have little
monetary value
Define Marginal - additional ; next things
How is economic growth made possible? - by more resources, better technology, and
increased productivity
What does building simple models do? - helps economist evaluate alternatives by looking at
both/each choices, cost and benefits
How can taking small incremental steps help? - helps economists test, whether the cost of the
decision was correct
Know the Marginal Cost/Benifict Chart (the one that looks like an X) - Know where the optimal
spot is, and which line is which
What does studying economics help us do? - helps us know how the economy works on a
daily basis
What is a free enterprise economy? - where people and privately owned businesses make the
decisions
The study of economics helps us to become better _______ ________ . - Decision Makers
What indicates that international trade is beneficial? - the amount in international trade that
is being done
Why do nations trade? - cheaper labor, cost companies more to make it on their own,
opportunity cost, etc.
What would happen without international trade? What kinds of goods does the U.S. import? -
with out trade, many products wouldn't be available on world market, and mainly imports to
U.S. that are needed would not be available with out trade - U.S. imports include - oil, gas, etc.
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