1. Define the following terms: goods, services, resources, labor, capital, land, entrepreneurial ability, scarcity, and rational self interest.

3. State the subject matter of economics.

4. Distinguish between Microeconomics and Macroeconomics.

5. Distinguish between positive and normative economics.

6. State the goal of economic theory.

8. Identify the implications of rational self-interest.

9. Identify 3 common mistakes made in faulty economic analysis.

The essence of economics is revealed by the answer to the question, "Who has everything that he or she desires to have?"

 The reality is that wants and desires are limitless while resources are scare.

 An item is scarce when the amount people desire exceeds the amount available at a zero price.

 Four broad categories of resources exist.

 The scarcity of resources has three important consequences.

 Goods and services are scarce.

 Scarce goods and services are not free, even if t

 Someone once reported that a strong correlation existed between the number of sun spots occurring in a year and the level of economic activity in the US that year. Does this report prove that sun spots affect economic activity? (FYI - careful reexamination of the data indicated that no relationship exists between sunspot and economic activity.)

 Try to maximize the expected benefit of a given cost

 Why did the price of gasoline rise dramatically in the spring?

 An increase in the price of gasoline will reduce the consumption of gasoline, all else equal.

 The City of Richmond should reduce its business taxes.

 Positive statements can be supported or rejected by evidence

 What happens to the price of wheat if one farmer cuts acreage in half?

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 An increase in cost will result in less of an activity

 What are choices are being made by individuals?

 How long will the current economic expansion last?

Some common words found in the essay are:
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Approximate Word count = 1009
Approximate Pages = 4 (250 words per page double spaced)