Econ 251 (PNW) Chapter 1 Learnsmart

Which of the following are issues most explored in microeconomics?

-a firm's decision to hire more workers -measuring the price of specific goods -the expenditures of a government entity -measuring total revenues of a firm or household

The scientific method consists of several elements, including:

-accepting, rejecting, and adjusting a hypothesis -observing real-world behavior and outcomes and formulating a hypothesis based on said observations -continuing to test the hypothesis against facts

Consumers derive personal satisfaction from goods and services by:

-allocating their time, energy, money and other resources to maximize their satisfaction from consuming these goods -acting in a self-interested manner

Which of the following scenarios are illustrated in the given PPC?

-an economy in full employment along the curve -attainable combinations of both goods below the curve

The combinations of goods that lie on the PPC of a country:

-are attainable -represent an efficient utilization of resources -utilize all of an economy's available resources

The concept or term that refers to the notion that all variables except those under immediate consideration are held constant for a particular analysis is known as:

-ceteris paribus -the other-things-equal assumption

Consider the relationship between the price of gas and the quantity of gas consumed by drivers. If we are consider the price of gas as the only factor affecting the quantity of gas consumed, while holding other factors such as drivers' incomes and tastes and preferences irrelevant, then we are invoking:

-ceterus paribus -the other-things-equal assumption

T/F? All, but the super wealthy, have a finite or limited amount of income.

False

T/F? Economies assumes that human behavior reflects "irrational self-interest"

False

Which of the following results from having scarce economic resources?

The production of limited goods and services.

Utility is defined as:

The satisfaction or pleasure obtained by consumers from consuming a good or service

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

avoids; scientific; actual

Normative economics is:

based on value judgements

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

budget

For economists, _____ goods includes all manufactured aids used in producing consumer goods and services

capital

Economic principles and models are tools for ascertaining ______ and _______ within an economic system

cause; effect

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

A(n) _______ in income will shift the budget line to the left

decrease

All natural resources, human resources, and manufactured goods that go into the production of goods and services are considered a society's scarce __________ resources

economic

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

economizing

____________ comes in the form of wages, interest, rent, profit, and even from government programs.

income

In economics, the term ________ describes spending that pays for the production and accumulation of capital goods.

investment

The work-related activities of a teacher and doctor fall under the resource category of _______

labor

From a economic standpoint, _____ includes all natural resources used in the production process

land

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

The discipline that studies the economy as a whole or its basic subdivisions or aggregates is known as:

macroeconomics

To economists, the term that means "extra", "additional", or "changes in" is:

marginal

For conducting a marginal analysis, individuals compare _________

marginal benefit and marginal cost.

Suppose you are given a $100 gift card you choose to spend it on a number of goods. You will select a combination of goods that is best for you and that maximizes your satisfaction. In other words, your choices will account for the effect of:

marginal benefits and marginal costs of each good considered.

The disagreement among economists involves ______, value-based policy questions

normative

A production possibilities curve illustrates the attainable combination:

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

Due to scarce resources, every individual, whether rich or poor, is faced with an __________ cost when choosing to produce or consume more of one good over another.

opportunity

As more and more of a particular good is produced, which of the following rises?

opportunity costs

The law of increasing _______ states that as production of a particular good increases, the cost of producing an additional unit rises.

opportunity costs

Trade-offs arising from limited resources give rise to:

opportunity costs

Each point on the PPC represents some ______ of two products

output combination

Unemployment in the economy is represented by:

points inside the production possibilities curve (PPC)

_________ economics focuses on facts and cause-and-effect relationships

positive

_____________ economic analysis concerns what is, whereas ____________ economic analysis embodies subjective feelings about what ought to be.

positive; normative

Type of Product (Pizzas and Robots) This ________ _______ table lists the different combinations of pizza and robots that can be produced with a specific set of resources

production possibilities

When individuals make decisions with some desired outcome in mind, they are engaging in ___________

purposeful behavior

Because individuals weigh costs and benefits, their economic decisions are ___________

rational

In developing economic theories, principles, or models, economists:

remove clutter and simplify

Arable land, water, machinery, and a professional baseball player are all considered scarce economic _______________ to production of goods and services

resources

Like the physical and life sciences, as well as other social sciences, economics relies on the ___________ method.

scientific

An increase in income will:

shift the budget line to the right

Marginal analysis involves the comparison of evaluation of:

the additional cost versus the additional benefit of a decision.

Jill is unemployed and decides to spend the day at the spa. Jill's opportunity cost of spending a day at the spa is equal to:

the daily spa rate, any other monetary expenses, and the value of the best alternative activity in which Jill could be engaged

In a world of scarcity:

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

The optimal allocation of resources is such that:

the marginal benefit (MB) of the good equals the marginal cost (MC)

Which of the following exemplifies that topics and subdivisions of economics can be rooted in both Macroeconomics and Microeconomics?

the unemployment rate and the decisions of individual firms and workers to encourage or impede hiring, as well as to search for work, respectively.

T/F? A trade-off occurs when some quantity of production or consumption is given up in order to produce or consume another good or service.

true

People desire goods and services that provide maximum utility. In fact, our desires or wants are:

unlimited and insatiable

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

when the marginal benefit is greater than or equal to the marginal cost

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

-combinations that fall on the budget line -a combination that involves the entire consumption of one good and zero consumption of the other good -combinations that fall inside the budget line -combinations on the midpoint of the budget line

In which of the following ways do capital goods differ from consumer goods?

-consumer goods satisfy wants directly -capital goods satisfy consumer wants indirectly through the production of consumer goods

A rightward shift of the production possibilities frontier of an economy represents:

-economic growth -an increase in the quantity of resources

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

-economic law -economic principle

Which of the following defines "caters paribus"

-factors other than those being considered in a particular analysis not change -other-things-equal assumption

The importance of the production possibilities model is that it shows the different combinations of goods and services that society can produce:

-given a fixed state of technology -given a fixed amount of resources -efficiently -in a fully employed economy

Specializing and participating in international trade allows an economy to:

-increase the quantities of capital and consumer goods available to society -circumvent the output limits imposed by its own PPC

Economic growth is achieved through:

-increased supplies of the factors of production -advances in technology

Which of the following describes the concept of rational self-interest?

-individuals look for and pursue opportunities to increase their utility or level of personal satisfaction -individuals allocate their resources to maximize their satisfaction -individuals weigh the costs and benefits of their decisions

An entrepreneur:

-innovates -makes strategic business decisions that set the course of an enterprise -takes the risk of earning profits or suffering losses from owning an enterprise

Combinations of output that fall inside the PPC represent:

-less total output in an economy -goods that are attainable -inefficient use of resources

Society's economizing problem involves:

-making choices in the face of scarcity -opportunity cost -scarce resources

Natural resources, labor, human capital, physical capital and entrepreneurship are all scarce economic resources privately or collectively owned by members of society. where these scarce resources are used to produce goods or services, there is:

-no "free lunch" -a cost borne by society in utilizing these resources to produce any good or service

As individuals' incomes rise, they will still be confronted with which of the following?

-opportunity cost -choices -trade-offs

Combinations of goods that are beyond the PPC:

-require economic growth -are currently unattainable -would require resources that are not currently available

Economic growth is the result of:

-technological advances -increases in the supply of resources -improvements on resource quality

The following figure illustrates which of the following?

-that as one moves to the right and produces more pizzas, the number of robots that must be given up rises. -that the resources used to produce industrial robots and pizzas are not perfectly flexible and interchangeable.

When incomes fall and the quantity of steak purchased has changed, economists will make the ceteris paribus assumption because:

-the assumption helps isolate the effects of a change in income on the quantity of steak purchased -economists would otherwise be confused by changes in other variables on the quantity of steak purchased

Which of the following statements or questions exemplify normative economics?

-the government ought to bail out distressed banks -what should the Federal minimum wage be? -the government should increase the minimum wage

Which of the following are economic themes considered in macroeconomics?

-the unemployment rate -national income -the level of prices in the economy also -international trade

Which of the following statements or questions exemplify positive economics?

-the unemployment rate in Mexico is higher than in the US -when the government increases the minimum wage, the unemployment rate will rise -as the flight ticket prices fall, airlines experience a sharp increase in revenue

The function of an entrepreneur is:

-to make strategic business decisions -to combine the resources of land, labor, and capital to produce a good or service

Economic principles are generalizations relating to ______ in economic behavior or to the economy itself

average tendencies

Which of the following best exemplifies the relationship between a capital good and a consumer good service?

A commercial baking oven and loaves of bread

Recently you decided to "supersize" your fries at McDonalds. On the one hand, your decision to supersize considered the additional costs associated with the super-size, including the additional monetary, caloric and cholesterol intake, as well as the extra time you had to wait for those fries because a new batch was being prepared. On the other hand, you determined the extra benefits from super-sizing included a few more mouthfuls of satisfaction from an increased portion of fries. The benefit clearly outweighed the costs since you chose to super-size. Which of the following does this illustrate?

Marginal Analysis

__________ (Microeconomics/Macroeconomics) is the discipline of economics concerned with individual units such as households, firms and government

Microeconomics

T/F? Economics assumes that human behavior reflects "random self-interest." This means they allocate their time, energy, and money to maximize their satisfaction

True

Which of the following illustrates that at any point in time, a fully employed economy must sacrifice some amount of one good to obtain more of another good?

a production possibilities table

Which of the following enables society to produce more goods with current resources?

advances in technology

In macroeconomics, an __________ is a collection of specific economic units treated as if they were one unit.

aggregate