Ag Microeconomics- Exam 1

comparing a set of feasible alternatives and picking the best one is an optimization process called

cost-benefit analysis

what are some subjects to the free-rider problem

National security, a neighborhood watch, public libraries

let's say that you are trying to decide what to do on Friday at 11 a.m. You rank your possible options from the one you value the most to the one that you value the least in the following order: going to class, sleeping in late, going to work early, getting lunch, going to the gym to exercise, and watching television If you decide to go to class, then what do we know about the opportunity cost of your decision?

The opportunity cost would be sleeping in late, since it was your next-best option

Economics is divided into two broad fields of​ study: microeconomics and macroeconomics. Microeconomics studies​ _________, while macroeconomics studies​ _________.

a small piece of the overall economy; the economy as a whole

the definition of economics states that it is the study of how

agents choose to allocate scarce resources and the impact of those choices on society.

Suppose that you allocate $20 each week for your entertainment budget. This money is spent on two items: either renting movies for $1 each at Redbox or downloading songs from iTunes at $1 each Given this information, which of the following would represent your budget constraint for entertainment?

amount spent on iTunes + amount spent at Redbox =$20

a surge in cocoa prices is ____________ and a pest attack not eh cocoa crop is ____________

an effect, the cause

lower infant mortality is _______ and an improvement in nutrient is _____________

an effect, the cause

to say that economists use the scientific method means that they are using

an ongoing process to develop models of the world and then test and evaluate those models

when making your decision about which activity, you should consider the monetary cost ___________ the opportunity cost of the activities. The goal is to choose the option that offers the greatest _________ benefit.

as well as, net

policy devisions made by the government are analyzed by

both microeconomics and macroeconomics

Suppose your New Year resolution is to get back in shape. You are considering various ways of doing​ this: you can sign up for a gym​ membership, walk to​ work, take the stairs instead of the​ elevator, or watch your diet. How would you evaluate these options and choose an optimal​ one?

do a cost-benefit analysis to compare the alternatives

empiricism describes a situation where

economists use data to analyze what is happening in the world

for a market to be in equilibrium, three conditions must hold. The amount produced by sellers must be ______ the amount purchased by buyers. The costs of making a product must be _______ the final price at which the product sells Buyers must place a value on the uses of the product that is _______________ the cost of buying the product

equal to, less than, greater than

which of the following is true regarding the concept of causation

it describes how one event can bring about change in another

in which of the following areas will taking an economics course help benefit you throughout your life

it will give you the logic behind using cost-benefit analysis when evaluation decisions, it will help you to analyze and predict human behavior in a variety of situations, it will instill the concept that what activity is given up by a decision plays an important role when making choices

a policy such as passing an economic stimulus to spur the economy would be studied under _________________, since it deals with ___________________

macroeconomics, the economy as a whole

Equilibrium describes a situation where

no one would benefit from changing his or her behavior

the ethical implications of a hotly debated government policy would best be considered a

normative question, since it deals with a subjective issue based on personal preferences

the statement that the United States is too aggressive in increasing the money supply is a _______________ statement nice it describes what people _____________.

normative, ought to do

economics, anthropology, psychology, sociology, and political science all study human behavior. economics differs from these other social sciences because it also addresses these three key concepts:

optimization, equilibrium, and empiricism

what are the three principles of economics

optimization, equilibrium, empiricism

the goal of optimization for an individual is to maximize

overall well-being

optimization describes a situation where

people weigh costs and benefits when making a decision

Free riding occurs when ________ are out of sync with ________

people's private benefits, the public interest

the statement that the United States has a budget deficit that is in excess of $15 trillion is a __________ statement since it describes what people ______________.

positive, actually do

when deciding whether to install visible countdown timers for pedestrians at crosswalks, which of the following would be considered in the cost-benefit analysis

the cost in terms of dollars of installing these new timers all over the city, the value of the lives lost by drivers who watch the countdown timers and try to make it through a light, the value of the pedestrians' lives saved by having the timers to assist in crossing the street, the higher the maintenance bill associated with fixing these more complex signals when they break down

during the process of optimization economists believe that people are considering

the feasibility of a choice, given the information available at the the time

how does the sample size affect the validity of an empirical argument

the larger the sample size the better

how do economists distinguish between models that work and those that don't

they test their models against real-world data

Your budget constraint for entertainment illustrates the concept of ________​, since as you increase your purchases of one​ item, you ____.

trade-offs, must decrease your purchase of the other item

which of the following is more susceptible to the free-rider problem: state parks or street lights?

use of street lights is more susceptible since even those who don't pay taxes still benefit, while state parks can charge for admission, so that everyone who goes pays their shares

which of the following is not an example of causation

washing your car will lead to raining that day

the opportunity cost of an activity is a measure of _________ when you do that activity

what is given up