Chapter 1 Econ
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
___is the situation in which a good or service is produced at the lowest possible cost
Productive efficiency
Which of the following is a macroeconomics question?
What determines the growth rate of gross domestic product?
Which of the following is a macroeconomics question?
What determines the inflation rate
Which of the following is a microeconomics question
What facts determine the price of carrots?
The three fundamental questions that any economy must address are
What good and services to produce, how will they be produced and who will receive them
Economic models
are simplified versions of reality
Economics is the study of the___people make to attain their goals, given their___resources
choices; scarce
___increase economic efficiency because it forces firms to produce and sell goods and services as long as the additional benefit to consumers is greater than the additional cost of production
competition
The decision about what goods and services will be produced made in a market economy is made by
consumers and firms choosing which goods and services to buy or produce
Microeconomics is the study of
how households and firms make choices
The branch of economics which studies the behavior of entire economies is called
macroeconomics
Economists reason that the optimal decision is to continue any activity up to the point where the
marginal benefit equals the marginal cost
A grocery store sells a bag of potatoes at a fixed price of $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes.
marginal revenue
An economic____is a simplified version of a some aspect of economic life used to analyze an economic issue
model
Every society faces economic trade-offs. This means
producing more of one good means less of another good can be produced
In a market economy, those who are willing and able to buy what is produced
receive the most of what is produced
Be definition, economics is the study of
the choices ppl make to attain their goals, given their scarce resources
Consider the following agents: the government, consumers, and producers. Who, in a centrally planned economy, decides what goods and services will be produced with the same resources available in the economy?
the government
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 positive economic statement?
the minimum wage law causes unemployment
Which of the following correctly describes the relationship b/w economic efficiency and economic equity?
there is often a trade-off b/w the two
Scarcity refers to the situation in which
unlimited wants exceed limited resources.
Allocative efficiency best explains___and productive efficiency best explains
what will be produced, how something will be produced
Which of the following is a normative economic statement?
The price of gasoline is too high
