Econ Exam #1 part 2
Correlation does not
imply causation
civilian non institutional population
16+, not inmates at an institution, not in military
Deflation
A situation in which prices are declining
The term "ceteris paribus" is Latin for which of the following?
All else equal
Entire Population
All those living in the country
Which of the following is NOT an example of an incentive inducing an economic agent (or a group of economic agents) to act?
Despite the recent increase in cigarette taxes, Mary continues to smoke just as much as before.
Which of the following is NOT one of the basic assumptions of economics?
Economic agents always make the correct choice
Which of the following is true regarding equilibria in economics?
Equilibrium is sometimes the best possible outcome, but sometimes not
In economics, an equilibrium is where...
Every economic agent is optimizing simultaneously
Economists assume that individuals generally make choices to maximize their utility. In this context, what is meant by "utility"?
Happiness
When working as a scientist and trying to explain the world, the goal of an economist is to...
Identify cause and effect
Why is the "ceteris paribus" assumption is important in economics?
It is essential to identifying causation
The concept of increasing marginal opportunity costs causes which of the following characteristics regarding the shape of the production possibilities frontier (PPF)?
It will cause the PPF to be concave (aka, "bow outward")
Why is the scientific process for most social scientists different from that for most physical and life scientists?
Laboratory experiments are often difficult/impossible in the social sciences
What is the "golden rule" of economics (and all of life)?
MC = MB
In an equilibrium, things are "at rest" because...
No agent has an incentive to change their behavior
Economists assume that economic agents generally attempt to pick the best feasible option given the information, knowledge, experience, and training they have. What is the process of doing this called?
Optimization
Firms, which is how economists refer generally to types of businesses, seek to maximize what?
Profits
Tradeoffs are implied by what?
Scarcity
Economists assume that governments seek to maximize what?
Social Welfare
Economists often say that "people respond to incentives." What do we mean by the term "incentive"?
Something that induces a person to act (or not act)
On what should we judge an economic model?
The accuracy of its predictions
Which of the following describes the term "opportunity cost"?
The value of the next best option given up to obtain the good or service
Economists assume that nonprofits seek to maximize what?
Total revenue
If we as a society invest more in capital goods today, then the future production possibilities frontier for our economy shifts
farther out
If we as a society invest more in capital goods today, then our economy benefits by being able to produce
more of both consumption and capital goods
marginally attached to the labor force
persons who would like to work and have searched actively for a job in the past 12 months
An economic model is a _________ designed to illustrate a __________
simplified, complex
Marginal Cost
the cost of producing one more unit of a good
labor force
the total number of workers, including both the employed and the unemployed (4 weeks looking)
price stability
when the overall price level in the economy does not change over time
