The study of how best to allocate scarce resources among competing uses

The most desired goods and services that are forgone in order to obtain something else.

Factors of production

Resource inputs used to produce goods and services; for example land, labor capital, entrepreneurship

Lack of enough resources o satisfy all desired uses of those resources.

Production possibilities

The alternative combinations and goods and services that could be produced in a given time period with all available resources and technology

Expenditures on (production of) new plant and equipment (capital) in a given time period, plus changes in business inventories.

An increase in output (real GDP): an expansion of production possibilities.

The use of market prices and sales to signal desired outputs (or resource allocations).

The doctrine of "leave it alone" of non intervention by gov't in the market mechanism.

An economy that uses both market and non-market signals to allocate goods and resources.

An imperfection in the market mechanism that prevents optimal outcomes.

Costs (or benefits) of a market activity borne by a third party; the difference between social and private costs (or benefits) of a market activity.

Government intervention that fails to improve economic outcomes.

The study of aggregate economic behavior, of the economy as a whole.

The study of individual behavior in the economy, of the components of the larger economy

The assumption that nothing else changes.

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Econ_Quiz 1

RMU Econ Quiz 1

Question	Answer
Economics	The study of how best to allocate scarce resources among competing uses
Opportunity Cost	The most desired goods and services that are forgone in order to obtain something else.
Factors of production	Resource inputs used to produce goods and services; for example land, labor capital, entrepreneurship
Scarcity	Lack of enough resources o satisfy all desired uses of those resources.
Production possibilities	The alternative combinations and goods and services that could be produced in a given time period with all available resources and technology
Investment	Expenditures on (production of) new plant and equipment (capital) in a given time period, plus changes in business inventories.
Economic Growth	An increase in output (real GDP): an expansion of production possibilities.
Market Mechanism	The use of market prices and sales to signal desired outputs (or resource allocations).
Laissez Faire	The doctrine of "leave it alone" of non intervention by gov't in the market mechanism.
Mixed Economy	An economy that uses both market and non-market signals to allocate goods and resources.
Market failure	An imperfection in the market mechanism that prevents optimal outcomes.
Externalities	Costs (or benefits) of a market activity borne by a third party; the difference between social and private costs (or benefits) of a market activity.
Government Failure	Government intervention that fails to improve economic outcomes.
Macroeconomics	The study of aggregate economic behavior, of the economy as a whole.
Microeconomics	The study of individual behavior in the economy, of the components of the larger economy
Ceteris Paribus	The assumption that nothing else changes.

Created by: murph25

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