Chapter 1-3 Pearson Dynamic Study Set

An electric power producer generates an external cost by emitting high levels of pollutants when it uses coal to generate power. The presence of this externality leads to:

overproduction

Whenever markets do not produce the most efficient outcomes on their own, we call this phenomenon:

market failure

What is the percentage change in price for a shirt that was marked down from $40 to $28?

-30%

Graphs are often used in economics because they

can simply complex topics

The stock of computers, factory buildings and machine tools used to produce goods is known as

physical capital

Economics is the study of choice under conditions of

scarcity

Macroeconomics is concerned with all of the following except:

unemployment rates, A: political part affiliation, standard of living, inflation rates

The principle of diminishing returns applies

when at least one input is fixed

When is output lower than the efficient level?

when marginal benefit is greater than marginal cost

When is output higher than the efficient level?

when marginal benefit is less that marginal cost

The vertical axis on a graph is also known as the

y-axis

When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?

A market

Macroeconomics can be used to understand all of the topics listed below, except

A: how a consumer decides between the purchase of two different cars, what causes economic booms and recessions, national unemployment trends, how the national economy works

Countries gain from specializing in producing goods in which they have a(n) __________ advantage and trading for goods in which other countries have a(n) __________ advantage.

Comparative, comparative

Which of these government policies can help economic growth?

Ensuring political stability and relatively little corruption

Economic decisions are made at every level in society. When we try to decide which production method to use among several alternatives, which of the following key economic questions are we trying to answer

How do we produce products

Which of the following are not essential components of an economic model?

Hypotheses, Variables, Assumptions, A: Normative Statements

Economics

Is concerned with how people respond to incentives.

The resources provided by nature and used to produce goods and services are also known as:

Natural Resources

occurs when a domestic firm shifts production to a different country.

Outsourcing

Which of these is NOT a source of market failure?

Perfect competition

In a market system, which of the following provides the information that individuals need to make decisions about resource allocation?

Prices

Understanding economics can help policymakers devise strategies to do all of the following excep

Reduce Poverty Levels, increase our standard of living, A: eliminate climate change, encourage business formation

In his 1776 book, "An Inquiry into the Nature and Causes of the Wealth of Nations," Adam Smith notes that specialization increases productivity. Which of the following was the cause of this phenomenon?

The division of labor

Marlene decided to close down her retail clothing store and go back to work for a large corporation, even though she was making an accounting profit. Her decision was based on the fact that she would make more money in her old job than she was making in the retail clothing store. Marlene's decision factored in:

The opportunity cost of lost wages from keeping her store open.

The slope of a straight line equals the change in the value on the __________ axis __________ by the change in the value of the other axis measured between any two points on the line.

Vertical, Divided

Which of the following is a positive economic statement

We should tax the wealthy more and use the money to provide services for the poor, the government should do something to help the homeless, full employment polices should be pursued, A if minimum wages rise then the unemployment will rise

You and your neighbor pick apples and cherries. If you can pick apples at a lower opportunity cost than your neighbor can, which of the following is true?

You have a comparative advantage in picking apples.

If the president of Columbia commented that "we should do something to reduce inflation in Columbia," this would be an example of

a normative statement

The ability of an individual, firm, or country to produce more of a good or service than competitors using the same amount of resources is known as:

absolute advantage

According to the theory of comparative advantage, specialization and free trade will benefit:

all trading partners who specialize in goods where they have comparative advantage

Ms. Boulware is the best lawyer and the best secretary in town. She has:

an absolute advantage in both jobs

A product produced in a foreign country and purchased by residents of the home country is called:

an import

In what type of economy does the government decide how economic resources will be allocated?

centrally planned economy

In what type of economy does the government decide how most economic resources will be allocated?

centrally planned economy

Economic models often simplify the real world by holding all things equal and changing one variable to determine the impact of the change. The "all things equal" assumption is also known as

ceteries paribus

If your nominal wages increased by 10% and inflation was 15%, your real wage;

decreased

One of the first steps in deciding whether to complete your education is to:

evaluate the marginal cost and marginal benifit

Goods and services produced domestically but sold to other countries are called __________.

exports

A patent is government protection that gives an inventor exclusive rights to profit from their invention __________.

for a period of 20 years

Social security payments are indexed to inflation so that recipients can

maintain their purchasing power

Decision analysis that involves comparing marginal costs and marginal benefits to determine the best course of action is known as

marginal analysis

The additional benefit resulting from a small increase in some activity is called the;

marginal benefit

The optimal economic decision is to continue any activity, investing or otherwise, up to the point where:

marginal benefit equals marginal cost

Economic variables that are calculated in current year prices are referred to as __________ variables, while variables that have been corrected to account for the effects of inflation are __________ variables.

nominal, real

What is the name given to the highest-valued alternative that must be given up to engage in any activity?

opportunity cost

Which of the following is known as the highest-valued alternative that must be given up in order to engage in an activity?

opportunity cost

When nations specialize in their comparative advantage and engage in trade:

overall standards of living increase

Absolute advantage is the ability of an individual, firm, or country to:

produce more of a good or service than competitors using the same amount of resources

The principle of opportunity cost evolves from the concept of

scarcity

Economic models are

simplifications of reality that focus only on key relationships and ignore less relevant details.

The role of the entrepreneur always involves:

taking risks

Which of the following is not a possible opportunity cost of attending college?

the cost of housing

Contracts, insurance, patents and accounting rules are:

inventions that make a market work better

If a country has a comparative advantage in the production of a good, then that country:

has a lower opportunity cost in the production of that good

The lowest amount a firm is legally allowed to pay an employee is known as the __________.

minimum wage