Chapter 1 Economics: Foundations and Models 1.1 Three Key Economic Ideas 1) Technological progress has made it possible for firms such as Apple and Alivecor to develop small electronic devices, including smartwatches, smartphones, and products that can be attached to the smartwatches and smartphones, to serve consumers who have become more health conscious and wish to monitor various health conditions. These firms are reacting to which of the three key economic ideas? A) firms attempt to maximize revenues B) optimal decisions are made at the margin C) people are rational D) people respond to economic incentives Answer: D Diff: 2 Page Ref: 3/3 Topic: Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an economist. AACSB: Analytical thinking Special Feature: Chapter Opener: Will Smart Devices Revolutionize Health Care? 2) The study of economics arises due to A) money. B) scarcity. C) greed. D) resources. Answer: B Diff: 1 Page Ref: 4/4 Topic: Scarcity *: Recurring Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an economist. AACSB: Analytical thinking 3) Scarcity refers to the situation in which A) unlimited wants exceed limited resources. B) unlimited resources exceed limited wants. C) a country's population is larger than its resource base. D) a nation's poverty level increases faster than its population. Answer: A Diff: 1 Page Ref: 4/4 Topic: Scarcity *: Recurring Learning Outcome: Mi