HW 1

Marginal cost is the ________ associated with a particular increase in an activity.

additional cost

Which of the following is a normative economic statement?

Tobacco products should be banned in all public spaces.

When every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it, ________ occurs.

allocative efficiency

What does the term "marginal" mean in economics?

an additional or extra

Which of the following is part of an economic model?

assumptions

The branch of economics which studies how households and firms make choices, interact in markets, and how government attempts to influence their choices is called

microeconomics.

Suppose the U.S. government encouraged new teachers to take jobs in underperforming schools by paying the new teachers a $20,000 bonus. These teachers would be exemplifying the economic idea that

people respond to economic incentives.

In a market economy, those who are willing and able to buy what is produced

receive the most of what is produced.

Economists assume that rational people

respond to economic incentives.

The processes used to produce goods and services describes

technology

http://imgur.com/a/bulb4

$3.15 million

http://imgur.com/a/O8PWN

4 hours

The Stogie Shop, a cigar store in the mall, sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each. What is the opportunity cost of buying a hand-rolled cigar?

4 machine-made cigars

(T/F) "An increase in the price of oranges will increase the demand for grapefruits." This statement is an example of a normative economic statement.

False

(T/F) As population declines, scarcity eventually disappears.

False

(T/F) Examining the conditions that could lead to inflation in an economy is an example of a microeconomics topic.

False

(T/F) Optimal decisions are made at the point where marginal benefit is maximized.

False

Economics is the study of the ________ people make to attain their goals, given their ________ resources.

choices; scarce

In a market economy, who decides what goods and services will be produced?

consumers and producers

Every society faces economic trade-offs. This means

producing more of one good means less of another good can be produced.