econ

in economics, choices must be made because we live in a world of

scarcity

which of the following is not a factor of production

$1,000 in cash

Microeconomics is the study of

how households and firms make choices

you have an absolute advantage whenever you

can produce more of something than others with the same resources

An "inquiry into the nature and causes of the wealth of nations" published in 1776 was written by

Adam Smith

the ____ demonstrates the roles played by households and firms in the market system

circular flow model

the relationship between consumer spending and disposable personal income is

a direct relationship

An inward shift of a nations production possibilites frontier can occur due to

a natural disaster like a hurricane or bad earthquake

the Great Depression of the 1930s with a large number of workers and factories unemployed would be represented in a production possibilites frontier graph by:

a point inside the frontier

when production reflects consumer preferences, _____ occurs

allocative efficiency

The revenue received from the sale of ____ of a product is a marginal benefit to the firm.

an additional unit

economists assume that individuals

are rational and respond to incentives

comparative advantage means the ability to produce a good or service

at a lower opportunity cost than any other producer

which is NOT a factor of production?

dollars

in economics, the term equity means

economic benefits are distributed fairly

all of the following are critical functions of the goverment in faciliating the operation of a market conomy except

ensuring an equal distribution of income to all citizens

the natural resources used in production are made available in the

factor market

productive efficiency is achieved when

firms produce goods and serivices at the lowest cost

in the circular flow model, producers

hire resources sold by households in the factor market

How are the fundamental economic questions answered in a market economy?

households, and firms interact in markets to decide the answers to these questions

the production possibilities frontier model shows that:

if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good

Which of the following is a postive economic statement?

if the price of iphones falls, a larger quantity of iphones will be purchased

in a production possibilites frontier model, a point ____ the frontier is productively inefficent

inside

in economics, the term ___ means "additional" or "extra"

marginal

Economists reason that the optimal decision is to continue any activity up to the point where the

marginal benefit equals the marginal cost

The term ____ in economics refers to a group of buyers and sellers of a product and the arrangment by which they come together to trade.

market

the production possibilities frontier shows the ____ combination of two products that may be produced in a particular time period with available resources

maximum attainable

an economic _____ is a simplified version of some aspect of economic life used to analyze an economic issue

model

which of the following statements about the economic decisions consumers, firms, and the government have to make is false?

only indivualds face scarcity, firms and the government do not

The higher valued alternative that must be given up to engage in an acitvity is the deffinition of

opporunity cost

Which of the following is a normative economic statement?

pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable

when you purchase a new pair of jeans you do so in the

product market

which of the following statements is true about profit?

profit is the difference between revenue and cost

households ____ final goods and services in the ____ market

purchase; product

Which of the following statements is true about scarcity?

scarcity refers to the situation in which unlimited wants exceed limited resources

which of the following is an example of an activity undertaken by an entrepreneur?

starting your own pet sitting business

By defintion, economics is the study of?

the choices people make to attain their goals, given their scarce resources

macroeconmics is the study of

the economy as a whole

Who, in a centrally planned economy, decides what goods and services will be produced with the scarce resources available in that economy?

the government

how are the fundamental economic decisions determined in north korea

the government decides because north korea is a centrally planned economy

Adam Smith`s invincible hand refers to

the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole

suppose when the price of laptops fall, college students buy more laptops. This implies that:

there is a negative relationship between laptop price and qantities purchased by college students

without an increase in the supplies of factors of production, how can a nation achieve economic growth?

through technological advancement which enables more output with the same qantity of resources

The idea that becuase of scarcity, producing more of one good or service means producing less of another good or service to the economic conept of

trade-off

each person goes about her daily business seeking to maximize her own self interests. in doing so, she contributes to the welfare of society at large. this is the underlying adam smiths invisible hand

true

entrepreneurs bring together the factors of production to produce goods and services

true

in a free market there are virtually no restrictions, or at best few restrictions on how factors of production can be employed

true

in the circular flow model, households supply resources such as labor services in the product market

true

when voluntary exchange takes place, both parties gain from the exchange

true

marginal analysis involves undertaking an activity

until its marginal benefits equal marginal costs

Adam Smith`s behavioral assumption about humans was that people

usually act in a rational, self-interested way

The three funadmental questions that any economy must address are:

what goods and services to produce; how will these goods and services be produced; and who receives them