Question

part 1: key terms - match the concept with the letter that corresponds to the correct definition.

1. economics
2. opportunity cost
3. scarcity
4. incentives
5. guns and butter
6. macroeconomics
7. microeconomics

a. the idea the we have unlimited wants but limited resources
b. the study of the whole economy
c. an economic expression describing the trade - off between producing weapons or consumer goods
d. the study of individual businesses and markets
e. the social science concerned with study of people and choices
f. something that motivates the actions of individuals, businesses, and policymakers
g. the value of your next best alternative
part 2: practice - identify if each of the real headlines primarily focus on macroeconomics (ma) or microeconomics (mi).

1. ___ the federal reserve controls a shaky us economy that likely needs more help
2. ___ 709,000 seek us jobless aid as pandemic escalates
3. ___ mcdonalds announces the launch of the mcplant - a vegan burger
4. ___ goldman sachs drops euro from its list of currencies expected to surge against the dollar
5. ___ farmworkers say the government is trying to cut their wages
6. ___ orange juice sales spike amid coronavirus pandemic

part 3: check your understanding - complete the following:

1. explain why individuals, businesses, and governments are forced to make choices.
2. use the idea of benefits and costs to explain why millions of people fly even though there are fatal plane crashes every year.
3. on july 11th, thousands of 7 - eleven convenience stores give away slurpees. fully explain why there is still a cost when you get a free slurpee.
4. give one reason why you are excited about learning economics.

Explanation:

1. Economics is the social - science about people and choices, so 1 - E.
2. Opportunity cost is the value of the next best alternative, so 2 - G.
3. Scarcity is the idea of unlimited wants but limited resources, so 3 - A.
4. Incentives are what motivate actions, so 4 - F.
5. Guns and Butter is an economic expression for trade - off between weapons and consumer goods, so 5 - C.
6. Macroeconomics is the study of the whole economy, so 6 - B.
7. Microeconomics is the study of individual businesses and markets, so 7 - D.
8. The Federal Reserve controlling the US economy is a macroeconomic issue, so 8 - MA.
9. People seeking jobless aid is a macroeconomic issue as it relates to the overall economy, so 9 - MA.
10. McDonald's launching a new product is a microeconomic issue about an individual business, so 10 - MI.
11. Goldman Sachs' currency - related decision is about an individual financial institution, so 11 - MI.
12. Farmworkers' wage issue is a microeconomic issue related to a specific group in the economy, so 12 - MI.
13. Orange juice sales spike is a microeconomic issue about a specific product market, so 13 - MI.
14. Individuals, businesses, and governments are forced to make choices because of scarcity. Resources are limited while wants are unlimited, so they must decide how to allocate resources.
15. People fly despite plane crashes because the benefits (such as time - saving, ability to travel long distances for work, leisure, etc.) outweigh the costs (the small probability of a fatal crash). The expected benefits of flying are greater than the expected costs for most people.
16. Even if a slurpee is 'free' at 7 - Eleven, there is still a cost. There is an opportunity cost (the time spent going to the store, waiting in line, etc.) and resources were used to produce and distribute the slurpee.
17. One reason to be excited about learning economics is that it helps in understanding how the world works, from personal financial decisions to large - scale economic policies.

Answer:

1. E. The social science concerned with study of people and choices
2. G. The value of your next best alternative
3. A. The idea the we have unlimited wants but limited resources
4. F. Something that motivates the actions of individuals, businesses, and policymakers
5. C. An economic expression describing the trade - off between producing weapons or consumer goods
6. B. The study of the whole economy
7. D. The study of individual businesses and markets
8. MA. The Federal Reserve controls a shaky US economy that likely needs more help
9. MA. 709,000 seek US jobless aid as pandemic escalates
10. MI. McDonald's announces the launch of the McPlant—a vegan burger
11. MI. Goldman Sachs drops the euro from its list of currencies expected to surge against the dollar
12. MI. Farmworkers say the government is trying to cut their wages
13. MI. Orange juice sales spike amid coronavirus pandemic
14. Because of scarcity (limited resources and unlimited wants).
15. Benefits (time - saving, travel ability) outweigh costs (small crash probability).
16. Opportunity cost (time, etc.) and production resources used.
17. Helps understand how the world works.