CH 1

The economic question of "______ to produce" is about decisions related to who is going to consume the goods and services produced.

for whom

Which of the following resources would an economist consider to be land?

forest oil and mineral deposits water

Most people around the world believe that markets do a _____ job of answering the core questions of WHAT, HOW, and FOR WHOM

good

Government intervention that fails to improve economic outcomes is called a:

government failure

In dealing with the "guns versus butter" decision, North Korea has come down decidedly on the side of _______________.

guns

Positive economics focuses on ______, whereas normative economics deals with _________.

how things might be done without subjective judgments of what is best; what ought to be done

Which two of the following define ceteris paribus?

.The idea that factors other than those being considered in a particular analysis do not change. Other-things-equal.

At a specific point on a particular graph,there is a 4-unit change on the vertical axis for every 2-unit change on the horizontal axis. At this point, the slope of this line is ____________

2

The United States gets _______ percent of its energy from carbon-based fuels: coal, petroleum, and natural gas.

80

Which of the following best describes the relationship between trade-offs and opportunity cost?

As you give up consumption of one good over another (the trade-off), an opportunity cost is incurred.

Which statements may be true of points located inside the production possibilities curve?

At these points, resources are being used inefficiently. At these points, the economy may be experiencing unemployment. At these points, society is not using all available resources.

Government failure occurs when government intervention improves economic outcomes.

False

The three main decisions that must be addressed by an economic system include which goods to demand, how to motivate employees, and how to distribute goods in a market.

False

True or false: When a curve shifts, the underlying relationship between the two variables remains the same.

False

Which two of the following economists favored government intervention in an economy?

John Maynard Keynes Karl Marx

______ is the most desired goods or services that are forgone to obtain something else.

Opportunity cost

Which one of the following illustrates the attainable combinations of two goods that can be produced given a specific set of resources?

Production possibilities curve

______ resources are those for which the quantity desired exceeds the quantity available.

Scarce

Which one of the following is true of scarcity with respect to economic resources?

There aren't enough resources available to satisfy all our desires.

Which one of the following statements is true about graphs? They always have a positive slope. They show a cause-and-effect relationship. They are summaries of empirical observations. They are always linear.

They are summaries of empirical observations.

The "economy is us" implies that the economy represents our collective consumption and production activities.

True

The three main decisions that must be addressed by an economic system do not include ______.

WHY output is produced

capital

a computer

land

a forest

labor

a steel worker

In the type of economy existing in the United States and most other countries, the government plays ______ role.

a substantial

Points ______ an economy's production possibilities curve are attainable as long as the economy is producing efficiently.

along

Points ______ the production possibilities curve are attainable so long as an economy uses all of its available resources.

along

The alternative combinations of final goods and services that could be produced in a given time period with all available resources and technology is

an economy's production possibilities.

The notion that "all else is constant" is captured by the Latin phrase, ______.

ceteris paribus

In the "guns versus butter" catchphrase, the word butter refers to:

civilian goods and services.

The idea that government interference in the economy should be kept at a minimum is advocated by

conservatives.

The "guns versus butter" catchphrase refers to the tradeoff all nations confront regarding the use of resources for national

defense

Combining market signals and government directives in order to minimize economic failures is seen as a(n) _____ task.

difficult

The choices people must make regarding the use of scarce resources are framed by the science of

economics

Land, labor, capital, and entrepreneurship are the basic __________________ of __________________.

factors production

True or false: A curve shows a cause-and-effect relationship.

false

In general, the role of economists within society is to

focus on the means for achieving given goals.

The economic question of "______ to produce" is about decisions related to the mix of factor inputs (land, labor, capital ...) used to produce goods and services.

how

The economic question of __________ to produce" is about decisions related to the mix of factor inputs (land, labor, capital ...) used to produce goods and services

how

The law of increasing opportunity costs states that as production of a particular good ______, the opportunity cost of producing an additional unit of the good ______.

increases increases

Points ______ the production possibilities curve of an economy are attainable, but inefficient.

inside

Points lying ______ the production possibilities curve (frontier) are attainable, but they reflect inefficient and incomplete use of available resources.

inside

Unemployment occurs at points ______ the production possibilities curve.

inside

In addition to entrepreneurship, the factor of production (resource) defined as _________ , consists of the physical actions and mental activities that people contribute to the production of goods and services.

labor

When it comes to the choice between reliance on the market and reliance on the government, public opinion around the world clearly favors the _____________ (government/market).

market

The branch of economics that studies the decision-making process of individual workers, households, and firms (that is, individual components of the larger economy) is known as ______.

microeconomics

The United States, like most nations, uses a combination of market signals and government directives to direct economic outcomes. This is commonly referred to as a _______ economy.

mixed

Suppose a production possibilities curve shows possible combinations of books and movies. Economic growth means that the economy will be able to produce _____ books and _____ movies than it could on the original production possibilities curve.

more & more

To economists, land includes all ______, or "gifts of nature," used in the production process.

natural resources

When the slope of a curve changes from one point to the next, then the curve is _______.

nonlinear

The statement "We should pursue green energy because environmental sustainability is our most important goal" is an example of ______ economics.

normative

A production possibilities curve shows the attainable combinations ______.

of two goods that can be produced given a specific set of resources

Due to scarce resources, every individual, whether rich or poor, faces __________________ cost when choosing to produce or consume more of one good over another.

opportunity

As more and more of a particular good is produced, which of the following rises?

opportunity cost

The production possibilities model shows the _______ producing two different goods.

opportunity cost

In the production possibility curve, trade-offs arising from limited resources give rise to _____.

opportunity costs

The law of increasing ______ states that as production of a particular good increases, the cost of producing an additional unit of other goods and services increases.

opportunity costs

The essential feature of the market mechanism is the ___________ signal.

price

Economics is the study of how people use _____ resources.

scarce

The production possibilities curve illustrates two essential principles: _______ and _______.

scarce resources; opportunity costs

The production possibilities curve illustrates two essential principles:(1) _______, meaning that there's a limit to the amount of output we can produce in a given time period with available resources and technology.(2) _______, or the idea that we can obtain additional quantities of any particular good only by reducing the potential production of another good.

scarce resources; opportunity costs

A society's task of minimizing economic failures is best accomplished by

selecting a balance between market signals and government directives.

When the relationship between two variables changes, the entire curve _______.

shift

Which of the following phrases and statements best describe the concept of laissez faire?

the doctrine of "leave it alone" nonintervention by government in the market mechanism

The concept of "the economy" is most analogous to the concept of:

the family

Combinations of output that fall inside the production possibilities curve of an economy represent __________________.

the inefficient use of resources a combination of goods that is attainable

An economy can produce either guns or butter with all available resources. Suppose it currently produces all butter and it chooses to produce some guns, thereby giving up some production of butter. As a result, the first 200 units of guns are produced at the cost of only 50 units of butter. Not surprisingly, the next 200 units of guns are produced at the cost of 100 units of butter, and the last 200 units of guns are produced at the cost of 300 units of butter. What does this situation describe

the law of increasing opportunity costs

According to Adam Smith, _____ determines what gets produced, how, and for whom.

the market mechanism the "invisible hand" laissez faire

A linear curve has _______ slope throughout.

the same

We calculate slope as the _______ distance between two points divided by the _______ between two points.

vertical horizontal

_______ strongly advocated laissez faire.

Adam Smith

________ strongly advocated laissez faire; whereas ________ recognized the need for government intervention in an economy.

Adam Smith; Karl Marx and John Maynard Keynes

True or false: Following are the three main choices that must be addressed by an economic system: what goods are to be produced, who will produce them, and where they will be produced.

False because An economic system has to determine what goods are produced, how they are produced, and for whom the output is produced.

entrepreneurship

a person who use resources in innovative ways

Food production in North Korea has _____ by that country's emphasis on maintaining a formidable military.

been significantly impaired

To produce at a point lying ______ the production possibilities curve would require economic growth.

outside

A (______________ economic analysis focuses on how things might be done without subjective judgements of what is best, whereas a __________ economic analysis represents subjective statements about what ought to be done.

positive normative

The answer to the economic question of "for whom" to produce determines _______.

who will get the output produced

Combinations of goods that fall inside the production possibilities curve _____.

are attainable are inefficiently produced are not utilizing all of an economy's resources

Combinations of goods that fall inside the production possibilities curve _____.

are attainable are not utilizing all of an economy's resources are inefficiently produced

In a production possibilities curve for two goods, combinations of goods that fall on the curve (select all that apply) ______.

are efficiently produced utilize all of an economy's resources are attainable

Once society has used some political process to set its economic goals, the job for economists is to ______.

assist in the design of appropriate policies

The term "laissez faire" refers to ______.

keeping government from interfering in the economy

Which of the following consists of the physical and mental activities that people contribute to the production of goods and services?

labor

Which of the following includes all natural resources used in the production of goods and services?

land

The factors of production include _____.

land labor capital entrepreneurship

The view that government intervention is needed to improve market outcomes is held most strongly by

liberals

Every nation faces the need to make three core choices/decisions owing to the fact that resources are _____.

limited

The production possibilities model helps us understand the ______ of output with a particular amount of inputs.

limits

The branch of economics that studies the economy as a whole or in the aggregate is known as ______.

macroeconomics

The economic question of ___________ to produce" is about decisions related to the mix (quantity and type) of goods and services to make available in a given economy.

what