Chapter 1

Which of the following is true of positive economics?

It avoids value judgments, tries to establish scientific statements about economic behavior, focuses on facts and cause-and-effect relationships.

_____is the discipline that examines the performance and behavior of an economy as a whole.

Macroeconomics

Which of the following are issues most explored in microeconomics?

Measuring the price of specific goods, the expenditures of a government entity, measuring total revenues of a firm

What best describes the combination of goods that lie on the production possibilities curve?

they are attainable; they utilize the economy's available resources

For better or worse, people have ______.

virtually unlimited wants

When an economy produces a good such that the marginal benefit equals the marginal cost, this indicates that ______.

resources are being allocated efficiently

______ economic resources means limited goods and services.

scarce

An increase in income will ______.

shift the budget line to the right

Positive economics ______ value judgments, tries to establish ______ statements about economic behavior, and deals with ______ economic events.

avoids; scientific; actual

A consumer's ____ line or constraint shows various combinations of two products that can be purchased with a specific amount of income.

budget

If economists examine the relationship between the price of a good and sales of that good while ignoring other related factors, or assuming those other factors are equal, they are using which of the following?

ceteris paribus

The straight-line budget constraint indicates ______ opportunity cost.

constant

Consumers must make choices about what to buy and what to forgo to fulfill wants because ______.

consumers' incomes are limited

Economic principles are generalizations that are ______.

expressed as the tendencies of average consumers, workers or firms

True or false: Everyone except for the super wealthy has a finite, or limited, amount of income.

false

True or false: Positive economics encourages value judgments.

false

What do combinations of output that fall inside the production possibilities curve represent?

goods that are attainable and less total outcome than points on the curve

Points lying ______ the production possibilities curve are attainable but reflect less total output than can be produced.

inside

As a result of our ______ incomes and ______ wants, it is in our self-interest to economize or pick and choose goods and services that maximize our satisfaction.

limited; insatiable

Economic principles are generalized statements that ______ consumer behavior.

look at typical

The disagreement among economists typically revolves around

normative economics

A production possibilities curve (PPC) illustrates the attainable combination ______,

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

Trade-offs arising from limited resources give rise to ______.

opportunity costs

Points lying ______ the production possibilities curve represent greater, but unachievable levels of output with current inputs, than that at any point on the curve.

outside

The assumption behind purposeful behavior is that ______.

people act in such a way as to rationally pursue their own interests

In a world of scarcity, ______.

the decision to obtain the marginal benefit (MB) of a specific option always includes the marginal cost (MC) of forgoing something else

Because consumers behave in a rationally self-interested manner, the consumer will purchase a good or service ______.

when the marginal benefit is greater than the marginal cost

Normative economics is ______.

Based on value judgments

A statement about economic behavior or the economy that enables prediction of the probable effects of certain actions is known as a(n) ______.

economic principle

The ____ problem refers to the need to make choices because economic wants exceed economic means.

economizing

Which of the following describes a budget line?

A curve showing various combinations of two products a consumer can purchase with a specific amount of income.

What does every point on a budget line graph represent?

All combinations of goods that can be purchased with a given income

Which of the following are ways of expressing the meaning of ceteris paribus?

Assuming other things remain constant and Assuming factors other than those being considered in a particular analysis do not change

What is the focus of positive economics?

Cause-and-effect relationships and Facts

Which of the following combinations are unattainable given a consumer's budget line?

Combinations that fall beyond the budget line

Which discipline studies the decision-making process of customers, workers, households, and business firms on an individual basis rather than as aggregates?

Microeconomics

_____ lists the different combinations of two products that can be produced with a specific set of resources, assuming full employment

Production Possibilities Table

What is the cause of a society's increasing opportunity costs with respect to the production of goods?

Resources that are not fully interchangeable

A production possibilities curve with an increasing slope is the result of which of the following?

The law of increasing opportunity costs

True or false: A decrease in income will shift the budget line to the left.

True

When people get satisfaction from charitable giving, they are ______.

acting out of rational self-interest

When economists consider the output of all U.S. businesses as a single entity, they are treating them as a(n) ______.

aggregate