Chapter 1.2

What comes under the purview of microeconomics?

An increase in the price of a good due to a sudden increase in its quantity demanded.

A company is likely to _____ before launching a new product in a market.

Conduct a marginal analysis

What is true of an economic choice?

Economic choice is based on a comparison of the expected marginal benefit and the expected marginal cost of the action under consideration.

_____ is the study of the economic behavior of entire economies.

Macroeconomics

_____ can be useful in analyzing how a choice affects a particular market and shapes the economic system as a whole.

Marginal analysis

_____ focuses on individual economic choices and market coordination of these choices.

Microeconomics

One of the main assumptions in economics is that:

People are rational.

The Sanders visited a number of car showrooms in their city and read a lot of reviews in journals and online before deciding on a car. This shows that:

Rational individuals may invest a lot of time and collect information before making a decision.

The economic concept of _____ is the attempt made by people to minimize the expected cost of achieving a given benefit.

Rational self-interest

Rational self-interest:

Results in the maximization of individual satisfaction.

Rational decision makers continue to acquire information as long as:

The additional benefit expected from that information exceeds the additional cost of acquiring it.

The lower the personal cost of helping others, _____.

The more help we offer

_____ refers to incremental, additional, or small changes in economic conditions relative to the status quo.

The term Marginal analysis

Which of the following are necessary to make a rational choice?

Time and information, which are both scarce and valuable.