Economics Chapter 2 Test

Front 1

how are the economic questions of what to produce and how to produce decided in our economy?

Back 1

consumers decide by their purchase

Front 2

why are personal decisions important in a market economy?

Back 2

the self motivated choice does the greatest good for society

Front 3

what is the guiding force behind individual decisions in a market economy?

Back 3

the invisible hand- if you choose poorly, your costs will rise and profits will decline

Front 4

what is the effect of social choices on individuals?

Back 4

1.Benefits and costs of a choice effects the whole society
2.social choices sometimes benefit some members of society at the expense of all members of society
3.sometimes social choices reduces the incentive of direct self interest
4.from the view of productivity, social decisions are generally not as effective as an individual decision

Front 5

list the 5 steps in the decision-making model

Back 5

1.define the problem
2.list the alternatives
3.list the criteria to evaluate the alternatives
4.evaluate the alternative based on the criteria
5.chose the alternative that best meets the chosen criteria

Front 6

what 2 things should you do in order to clearly define a problem?

Back 6

be objective and focus on the issue

Front 7

how do we choose alternatives?

Back 7

limit the alternatives and be realistic

Front 8

how do we select criteria on which to base our decision?

Back 8

durability, acceptability to authority figures, other expenses and salvage or trade in value

Front 9

how do we evaluate the alternatives based on our criteria?

Back 9

decision matrix- chart that tells the pros and cons of your choice

Front 10

how is the most satisfaction derived from personal decisions?

Back 10

choose the best alternative