Chapter 1
Opportunity cost is defined as
the highest valued alternative that must be given up to engage in an activity.
Which of the following is a microeconomics question?
How will Apple decide on a selling price for the iPad?
Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2013 and 2015.
23.8%
The Stogie Shop, a cigar store in the mall, sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each. What is the opportunity cost of buying a hand-rolled cigar?
4 machine-made cigars
If the price of milk was $1.25 a gallon and it is now $2.25 a gallon, what is the percentage change in price?
80 percent
Area of Triangle
Base times Height Divided by 2
How are the fundamental economic decisions determined in Cuba?
Correct The government decides because Cuba is a centrally planned economy.
Which of the following is a normative economic statement?
Fashion designers SHOULD BE allowed to copyright designs to promote innovation.
Your roommate, Serafina, a psychology major, said, "The problem with economics is that it assumes that consumers and firms always make the correct decision. But we know that everyone's human, and we all make mistakes." Do you agree with her comment?
I disagree with her. Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave rationally, meaning they make the best decisions given their knowledge of the costs and benefits.
Which of the following is a positive economic statement?
If the price of gasoline rises, a smaller quantity of it will be bought.
________ involves undertaking an activity until its marginal benefits equal marginal costs.
Marginal analysis
Which of the following contributes to the efficiency of markets?
Markets promote competition and voluntary exchange.
Which of the following statements about positive economic analysis is true?
Positive analysis uses an economic model to estimate the costs and benefits of different course of actions.
Which of the following is a problem inherent in centrally planned economies?
Production managers are more concerned with satisfying government's orders than with satisfying consumer wants.
In 2015, Peelville consumed 30,000 bananas. In 2016, banana consumption rose to 35,000. Calculate the percentage change in banana consumption.
Second Value minus the first value divided by the first value times 100 =16.67%
Which of the following is motivated by an equity concern?
Some U.S. colleges have cut back on merit scholarships since these programs siphon money from need-based programs, thus harming lower-income students with greater financial need.
Which of the following is an example of a "how much" decision?
The Pleasantville movie theatre is open only in the evenings. The theatre's manager is debating whether to add daily matinee shows.
It would seem that Commerce Bank would have a strong incentive to install "bandit barriers" to deter robberies. Why wouldn't they do it?
The banks must have weighed the cost of installing bandit barriers against the benefits and decided that they have "no interest in ever putting in the barriers."
How does a market system prevent people from getting as many goods and services as they wish?
The market system allocates goods and services to those who are able to pay for those products and therefore income is a limiting factor.
Which of the following best describes an assumption economists make about human behavior?
They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time.
Area of Trapoziod
Top plus bottom divided by 2 times the height
Trade-offs force society to make choices when answering what three fundamental questions?
What goods and services to produce; how will these goods and services be produced; and who receives them?
The term "market" in economics refers to
a group of buyers and sellers of a product and the arrangement by which they come together to trade.
The economic analysis of minimum wage involves both normative and positive analysis. Consider the following consequences of a minimum wage: a. The minimum wage law causes unemployment. b. Unemployment would be lower without a minimum wage law. c. Minimum wage laws benefit some workers and harm others. d. The minimum wage should be more than $7.25 per hour. Which of the consequences above are positive statements and which are normative statements?
a, b, and c are positive statements and d is a normative statement.
What does the term "marginal" mean in economics?
an additional or extra
Ted quits his $60,000-a-year job to be a stay-at-home dad. What is the opportunity cost of his decision?
at least $60,000
Voluntary exchange increases economic efficiency
because neither the buyer nor the seller would agree to a trade unless they both benefit.
Economics is the study of the ________ people make to attain their goals, given their ________ resources.
choices; scarce
In a market economy, who decides what goods and services will be produced?
consumers and producers
Who receives the goods and services produced in the United States depends largely on
how income is distributed.
The branch of economics which studies how households and firms make choices, interact in markets, and how government attempts to influence their choices is called
macroeconomics
If a straight line passes through the point x = 12 and y = 4 and also through the point x = 4 and y = 8, the slope of this line is
negative one half.
If a straight line passes through the point x = 8 and y = 4 and also through the point x = 12 and y = 6, the slope of this line is
one half.
Technological progress has made it possible for firms such as Apple and Alivecor to develop small electronic devices, including smartwatches, smartphones, and products that can be attached to the smartwatches and smartphones, to serve consumers who have become more health conscious and wish to monitor various health conditions. These firms are reacting to which of the three key economic ideas?
people respond to economic incentives
Holding all other personal characteristics-such as age, gender, and income-constant, economists would expect that
people without health insurance will be less likely to be overweight than people with health insurance.
Every society faces economic trade-offs. This means
producing more of one good means less of another good can be produced.
Which of the following is an example of an economic trade-off that a firm has to make?
whether it is cheaper to produce with more machines or with more workers