Ch1 Eco

the total amount produced of most goods is ___ the amount that consumers would like to buy. To allocate the goods produced to the people who value them the​ most, we use ____

below; the price mechanism

Policy decisions made by the government are analyzed by​

both microeconomics and macroeconomics.

Since optimization is used to analyze​ people's choices and help them improve the outcomes of their​ choices, its

both normative and positive.

Everything else the​ same, as the price of the good​ increases, quantity demanded

decreases

A price ceiling set below the natural equilibrium price would cause the quantity______ to exceed quanity_____

demanded; supplied

The concept of diminishing marginal benefits means that

each additional unit consumed is worth less to you than the previous one.

Economics is all about making choices. The reason we have to choose one thing over another​ is:

economic resources are scarce.

Empiricism describes a situation where

economists use data to analyze what is happening in the world .

When economists test their theories using​ evidence-based analysis, they are most likely using​ __________.

empiricism through the use of data.

Marginal analysis is a​ cost-benefit calculation that

focuses on the differences between one feasonable alternative and the next feasible alternative.

For a trade to take​ place, a​ buyer's willingness to pay must be​

higher than the​ seller's willingness to accept and equal to the​ seller's willingness to accept.

The demand curve shows​ ___________.

how the quantity demanded responds to changes in the price of the good.

If opportunity cost were to suddenly​ increase, total cost would

increase and net benefit would decrease.

As a firm produces more of a​ good, the cost of producing each additional unit

increases

the marginal cost of producing a good________ as you make more of that good

increases

Subjects should be assigned ______ to either a test or control group in order to get the most unbiased comparison.

randomely

Holding all else​ constant, if the number of cell phone manufacturers suddenly decreased due to increased​ regulations, then

supply would shift​ leftwards, equilibrium price would​ increase, and equilibrium quantity would decrease.

A budget constraint represents​

the bundles of goods or activities that a consumer can choose given her limited budget.

Optimization is the process that describes​

the choices that governments make

The supply curve represents

the minimum price sellers are willing to accept to sell an extra unit of a good.

The concept of diminishing marginal benefits states that

the more you consume of a​ good, your willingness to pay for an additional unit declines.

Price takers exist throughout______ markets

competitive

For a market to be in​ equilibrium, three conditions must hold

1) The amount produced by sellers must be equal to the amount purchased by buyers. 2)The costs of making a product must be less than the final price at which the product sells 3) Buyers must place a value on the uses of the product that is greater than the cost of buying the product.

There are three necessary ingredients to the​ buyer's problem:

1.​ Consumer's tastes and preferences 2. Prices of goods and services 3. Amount of money the consumer has to spend

How does a natural experiment differ from a randomized​ one?

A natural experiment uses existing​ variation, while a randomized experiment generates variation.

How is the mean calculated from a series of​ observations?

The mean is the sum values of the observations divided by the number of observations.

Microeconomics is concerned​ with:

Externalities arising from production and consumption.

The Law of Supply states that supplies____ as price increases

Increase

Which of the following statements is true in the case of an anecdotal​ argument?

It can lead to skeptical and misleading conclusions. ;It is appropriate when contradicting a blanket statement.

Consumer surplus is based on which of the following economic​ theories?

Marginal analysis

How does microeconomics differ from​ macroeconomics

Microeconomics is the study of how​ individuals, households,​ firms, and governments make​ choices, while macroeconomics is the study of the economy as a whole.

Which of the following would be considered a scarce resource for​ producers?

Natural resources for productionNatural resources for production. B. Equipment and toolsEquipment and tools. C. Low minus skill laborLow−skill labor.

Why does a demand curve with a constant slope not have a constant​ elasticity?

Slope is based on absolute change and elasticity is based on percentage change.

How would a decrease in demand affect the equilibrium price in a​ market?

The equilibrium price decreases

How would the equilibrium price in a market be affected if there were a small increase in demand and a large increase in supply?

The equilibrium price decreases

How would the equilibrium price in a market be affected if there were a small decrease in demand and a large decrease in supply

The equilibrium price increases

A​ consumer's budget set refers to the collection of all possible bundles that​

a consumer can purchase with her income

Holding all else​ equal, if the price of a digital camera​ rises, then we can expect

a decrease in the quantity demanded of digital cameras.

the price elasticity of demand shows the percentage change in the quantity demanded of a good due to ________ change in the goods price

a percentage change 0.4-1.4

Microeconomics studies _____ while macroeconomics studies​ _____

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

An experiment would be conducted to determine_____ among the chosen variables.

causation

Economists study_____ ; ​therefore, the unifying feature of economics is a focus on

all human behavior; choice

Economists conduct research on the​ "effects of global warming on the​ economy". This means they study the effects of global warming on the national​ income, international trade etc. It is considered a

macroeconomics

an increase in a consumers income causes her budget set to encompass _____ bundles

more

for two goods that are complements, the cross-price elasticity of demand will be _______

negative

Equilibrium describes a situation where

no one would benefit from changing his or her behavior

Which of the following areas are addressed in the study of​ economics

optimal tax policies, The benefits associated with a decision, money, prices

Optimization describes a situation where

people weigh costs and benefits when making a decision

Which change causes a movement along the demand​ curve?

price of the good itself

An indifference curve is the set of bundles that​

provide an equal level of satisfaction for the consumer.

Financial incentives can help make people behave in a desired way when the incentives are​ __________.

provided consistently.

The Law of Demand states that as the price of a good​ increases, ceteris paribus​, the_______ decreases

quantity demanded

One reason​ free-riders exist could be​ that:

the private benefit exceeds the private cost.

The concept of opportunity cost is a measure of​

the value of the best alternative use of a resource.

Optimization in levels examines​ ___________, while optimization in differences analyzes​ __________

total net benefits of​ alternatives; the change in net benefits.

a budget constraint implies that the consumer faces

trade-offs

Scarcity is the situation of having ________ wants in a world of _______ resources.

unlimited; limited

positive questions ask

what is or what will be

normative questions ask

what ought to be

The lowest price that a seller is willing to receive to sell an extra unit of a good is called

willingness to accept

Can two indifference curves​ intersect

​No, intersecting indifference curves would imply that a consumer is indifferent between bundles that yield different total benefits.

Which type of experiment is likely to yield more accurate​ results?

​Randomized, because a natural experiment may not be completely randomized.

Does the principle of optimization imply that people always make the best​ choices?

​Yes, it is a good approximation for the decisions people make.

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

​cost-benefit analysis.