Economics CH1

Although water is very abundant in most places, it is scarce because:

it has two or more alternative uses

Making choices that are expected to achieve the highest possible value for some objective is termed:

maximizing

Economists concerned about the behavior of individual households, firms, and industries are studying:

microeconomics

A simplified representation of a particular problem is a:

model

The current rate of unemployment of 5 percent is too high. This is a _______ statement.

normative

Economists are:

not always in agreement on the best way to implement policy decisions

The current rate of unemployment is 5 percent. This statement:

positive

A systematic set of procedures through which knowledge is created is:

the scientific method

A(n) _______ does not pose the problem of scarcity; one use of the good is not an alternative to another use.

free good

A scarce resource is one that:

has alternative uses

The "all other things unchanged" assumption is useful because it:

helps to restrict analysis to the effect of a single economic factor

An answer to the question "How are goods produced?" determines:

how resources are combined in the production of goods

The "all other things unchanged" assumption is used to:

simplify the very complex real world

According to the textbook, economics is a:

social science

Economics is a:

social science that deals with making choices among alternatives

Positive statements are:

statements that can be tested

Macroeconomics deals with:

the analysis of the aggregate values in the economy

The economic way of thinking includes:

the assumption that individuals choose to maximize some objective

Whenever a choice is made:

the cost of that choice could be referred to as opportunity cost

Reaching the incorrect conclusion that one event causes another because the events tend to occur together is called:

the fallacy of false cause

The three fundamental economic questions of what, how, and for whom:

exist because of scarcity

The problem of determining what goods and services society should produce:

exists because there are not enough resources to provide all the goods and services that people want to purchase

Scarcity exists when:

a choice must be made among two or more alternatives

The statement that "there is no such thing as a free lunch" means:

any production requires the use of scarce resources, and thus the sacrifice of another alternative

The economic way of thinking includes:

attention paid to the opportunity costs involved in any choice

Something whose value does not change is a:

constant

The scientific method is more difficult for economists than, say, chemists, because:

controlled laboratory conditions are more problematic in economicsm; it is difficult to hold other factors that may affect the variables being studied constant in economics; economic conditions may change quickly and unexpectedly.

In economics, the function of theories, laws, and hypotheses is to:

discover relationships between events that are important to economic behavior

The economic way of thinking includes:

emphasis on how choices are made at the margin

A variable that induces a change in another variable is a(n):

independent variable

Microeconomics deals with:

individual units in the economy

A theory that has won virtually universal acceptance is a:

law

The branch of economics that examines the impact of choices on aggregates in the economy is:

macroeconomics