Question: Economics is a social science that studies how individuals, institutions, and society may:

Answer: Best use resources to maximize satisfaction of economic wants.

Question: A recurring theme in economics is that people:

Answer: Have unlimited economic wants, but limited resources.

Question: As a consequence of the problem of scarcity:

Answer: Individuals have to make choices from among alternatives.

Question: The idea in economics that “there is no free lunch” means that:

Answer: There are opportunity cost involved even in free lunches.

Question: Economic analysis assumes “purposeful behavior”, which means that people will decisions or actions:

Answer: That will increase their will-being.

Question: In analyzing human decision and action, economists assume that:

Answer: People’s behavior reflects rational self-interest.

Question: The opportunity cost of costructing a new public highway is the:

Answer: Value of other goods and services that are sacrifieced in order to construct the new highway.

Question: The opportunity cost to a consumer who smokes cigarettes consists of the:

Answer: Products that the consumer could have bought instead of cigarettes.

Question: The economic perspective focuses largely on marginal analysis, which means analyzing:

Answer: The changes in the situation that would result from a given action.

Question: From an economic perspective, when a consumer decides to buy more life insurance, the consumer has most likely concluded that the:

Answer: Marginal benefit of more insurance coverage is greater than the marignal cost.