Chapter 1 - The Principles and Practice of Economics
According to the rationality assumption, people:
Do not intentionally make decisions that would leave them worse off.
The measure of benefits minus costs is:
net benefit
The opportunity cost of lying in the sun to get a tan is:
- the potential skin problems that could result from sunlight exposure. - the time you take to lie in the sun. -the next best activity you could do instead of lying in the sun. All of these are the opportunity cost.
An example of subjective judgement would be:
-what level of saving a person will make for future expenditures. -the value of a rock from the moon. -how much risk one is willing to accept to receive a gain. ALL OF THE ABOVE
Which of the following is not an economic agent?
All are economic agents -Corporation -Labor Union -Charity
Which of these covers the study of topics such as inflation and unemployment?
Macroeconomics
Economics differs from these other social sciences because it also addresses these three key concepts: _________.
Optimization, equilibrium, and empiricism.
If the president of Colombia commented that "we should do something to reduce inflation in Colombia," this would be an example of:
a normative statement
Economic activities that are feasible have what characteristics:
affordable and available
The definition of economics states that it is the study of how _________.
agents choose to allocate scarce resources and the impact of those choices on society.
Empiricism is:
analyzing data or evidence
Empiricism describes a situation where
economists use data to analyze what is happening in the world
Macroeconomics can be used to understand all of the topics listed below, except:
how a consumer decides between the purchase of two different cars
__________ is the study of how households and businesses make choices, how they interact in markets, and how government influences their choices.
microeconomics
Equilibrium describes a situation where
no one would benefit from changing his or her behavior
Selecting the best feasible option among available manufacturing options is called:
optimization
Optimization describes a situation where
people weigh costs and benefits when making a decision
Macroeconomics is concerned with all of the following except:
political party assumption
Which of the following is not a possible opportunity cost of attending college?
the cost of housing
A definition of opportunity cost is:
the value of best thing that you give up to get something else.
Which of these is a macroeconomic study?
The study of how fast prices in general are rising.
Facts, measurements, or statistics used to describe something specific are collectively known as:
data
When an investment counselor advises a client as to the risk/return trade-off on an investment, this type of help is called _______________ economics.
prescriptive
when an investment counselor advises a client as to the risk/return trade-off on an investment, this type of help is called _______________ economics.
prescriptive
Economics is the study of choice under conditions of:
scarcity
The principle of opportunity cost evolves from the concept of:
scarcity
Costs that cannot be recovered and therefore aren't relevant to a decision for a future activity are called _______________ costs.
sunk
The optimal economic decision is to continue any activity, investing or otherwise, up to the point where:
the additional benefit of the activity is at least more than the additional cost of the activity