Name:_________________________________________
Chapter 1 - The Nature and Method of Economics
THE ECONOMIC PERSPECTIVE
1. Define Economics.
2. List the three aspects of the economic perspective.
2a. How are scarcity and choice related?
2b. How are the terms "free lunch" and opportunity cost
related to scarcity?
2c. What does the "rational self- interest" mean to economists?
2d. List alternatives to "rational self-interest" which can be used to
organize an economy or organization.
2e. What is meant by marginal analysis? Use an example in your
answer that is not from the text.
WHY STUDY ECONOMICS
3. Describe the two basic reasons for studying economics giving
examples of each.
ECONOMIC METHODOLOGY
4a. Define each of the following:
Theoretical economics.
Induction.
Deduction.
Economic principle/economic law.
4b. Describe the meaning and importance of generalizations to economics.
Use an example in your answer.
4c. What is the Other-Things-Equal Assumption (ceteris paribus)
and why is it essential to economics?
4d. Compare and contrast the terms "generalization" and
"abstraction".
5. Describe the basic steps in policy making.
6a. What are the widely accepted economic goals of the U.S. and
other developed countries.
7b. Describe and give an example of conflicting economic goals
and describe another example of complementary economic goals.
MACROECONOMICS AND MICROECONOMICS
8a. Define microeconomics and give an example.
8b. Define micro economics and give an example.
9. Compare and contrast positive and normative economics.
PITFALLS TO OBJECTIVE THINKING
10. How may each of the following hinder objective thinking?
Biases.
Loaded terminology.
Definitions.
11. Define and give an example of the following;
Fallacy of composition.
Post Hoc ergo prompter hoc fallacy.
Correlation vs causation.