McGraw-hill Econ 201 Chapter 1

Suppose you are given a $100 gift card and 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. Your choices will involve which of the following? A decision between attainable and unattainable combinations of the goods under consideration An evaluation of the unlimited resources used in the production of each good considered The available supply of each good considered A comparison of marginal benefits and marginal costs for each good considered

A comparison of marginal benefits and marginal costs for each good considered

Which of the following describes a budget line? Multiple choice question. A curve showing various combinations of two products an economy can produce with a specific amount of resources. A curve showing various combinations of three or more products a consumer can purchase at different prices. A curve showing various combinations of two products a consumer can purchase with a specific amount of income. A schedule showing various combinations of three or more products a consumer can purchase at different prices.

A curve showing various combinations of two products a consumer can purchase with a specific amount of income.

Which of the following describes a budget line? Multiple choice question. A schedule showing various combinations of three or more products a consumer can purchase at different prices. A curve showing various combinations of two products a consumer can purchase with a specific amount of income. A curve showing various combinations of two products an economy can produce with a specific amount of resources. A curve showing various combinations of three or more products a consumer can purchase at different prices.

A curve showing various combinations of two products a consumer can purchase with a specific amount of income.

A point that lies inside the production possibilities curve reflects which of the following? Multiple choice question. A failure to achieve full employment An efficient use of resources Unattainable combinations of output Too many resources being allocated to the production of one good

A failure to achieve full employment

A point that lies inside the production possibilities curve reflects which of the following? Multiple choice question. Too many resources being allocated to the production of one good A failure to achieve full employment Unattainable combinations of output An efficient use of resources

A failure to achieve full employment

Which of the following enables society to produce more goods with current resources? Multiple choice question. Advances in technology Decreases in entrepreneurial ability Increases in population Decreases in labor

Advances in technology

Which of the following enables society to produce more goods with current resources? Multiple choice question. Increases in population Advances in technology Decreases in entrepreneurial ability Decreases in labor

Advances in technology

What does every point on a budget line graph represent? Multiple choice question. The minimum income required to purchase two or more goods at the same time All combinations of goods that can be purchased with a given income The maximum utility achievable at a given income All combinations of goods that are unattainable with a given income

All combinations of goods that can be purchased with a given income

What does every point on a budget line graph represent? Multiple choice question. The minimum income required to purchase two or more goods at the same time The maximum utility achievable at a given income All combinations of goods that are unattainable with a given income All combinations of goods that can be purchased with a given income

All combinations of goods that can be purchased with a given income

Which of the following are ways of expressing the meaning of ceteris paribus? (Check all that apply.) Assuming factors other than those being considered in a particular analysis do not change Assuming additional factors, other than those under consideration, are given equal consideration Assuming other things are equal Assuming additional factors, other than those under consideration, play a significant role in analysis

Assuming factors other than those being considered in a particular analysis do not change Assuming other things are equal

Why is it in our self-interest to economize or pick and choose goods and services that maximize our satisfaction? Multiple choice question. Because of our limited incomes conflicting with our insatiable wants for goods and services Because of our unlimited incomes conflicting with our insatiable wants for goods and services Because some goods and services are less expensive than their substitutes so we should choose those cheaper items Because of our limited incomes conflicting with our limited wants for goods and services

Because of our limited incomes conflicting with our insatiable wants for goods and services

Which of the following are general categories economists use to classify economic resources? Multiple select question. Capital Labor Entrepreneurial ability Land Money

Capital Labor Entrepreneurial ability Land

Which of the following are the focus of positive economics? Multiple select question. Idealized situations Cause-and-effect relationships Facts How economies ought to function

Cause-and-effect relationships Facts

If economists examine the relationship between the price of a good and sales of that good while ignoring other related factors, or assuming those other factors are equal, they are using which of the following? Multiple choice question. Scarcity theory The scientific method Marginal costs Ceteris paribus

Ceteris paribus

Which of the following combinations are unattainable given a consumer's budget line? Multiple choice question. Combinations that fall on the budget line Combinations that fall beyond the budget line Combinations that fall inside the budget line A combination that intersects either of the axes

Combinations that fall beyond the budget line

Which of the following combinations are attainable given a consumer's budget line? Multiple select question. Combinations falling only on the Y-axis Combinations that fall inside the budget line Combinations that fall on the budget line Combinations that fall beyond the budget line

Combinations that fall inside the budget line Combinations that fall on the budget line

______ goods satisfy wants directly, whereas ______ goods do so indirectly. Multiple choice question. Present; future Future; present Capital; consumer Consumer; capital Demand; supply

Consumer; capital

Taken together, the four general categories of economic resources (land, labor, capital, and entrepreneurial ability) are referred to as which of the following? Multiple choice question. Other-things-equal assumption Factors of production Opportunity cost Economizing problem

Factors of production

True or false: To economists, rational self-interest is the same as selfishness.

False

What do combinations of output that fall inside the production possibilities curve represent? Multiple select question. Goods that are unattainable Goods that are attainable Less total output than points on the curve Proper output in an economy

Goods that are attainable Less total output than points on the curve

When a country engages in international specialization, it focuses on producing which of the following? Multiple choice question. Goods with the highest opportunity costs Goods with the lowest opportunity costs Goods that minimize utility Goods whose marginal costs exceed their marginal benefits

Goods with the lowest opportunity costs

Economic growth is the result of which of the following? Multiple select question. Increases in the supply of resources Technological advances Improvements in resource quality Decreases in the demand for capital goods

Improvements in resource quality Technological advances Increases in the supply of resources

comes in the form of wages, interest, rent, profit, and even from government programs. Multiple choice question. Taxes Transfers Spending Income

Income

Specializing and participating in international trade allows an economy to do which of the following? Multiple select question. Increase the quantities of capital and consumer goods available to society Get more of a desired good by sacrificing greater amounts of some other good Divert high-skilled resources toward low-valued services Circumvent the output limits imposed by its own production possibilities curve

Increase the quantities of capital and consumer goods available to society Circumvent the output limits imposed by its own production possibilities curve

Which of the following is true of positive economics? It avoids value judgments. It deals with what the economy should be like. It tries to establish scientific statements about economic behavior. It focuses on value judgments. It focuses on facts and cause-and-effect relationships.

It avoids value judgments. It tries to establish scientific statements about economic behavior. It focuses on facts and cause-and-effect relationships.

Which of the following can be stated as potentially true about any economy? Multiple choice question. Its current choice of position on its production possibilities curve helps determine the curve's future location. Increased supplies of the factors of production will cause its future location on the curve to expand inward. Its future location on its production possibilities curve has no bearing on its current decisions. Increased supplies of the factors of production will only affect its current location on its production possibilities curve.

Its current choice of position on its production possibilities curve helps determine the curve's future location.

(Microeconomics/Macroeconomics) is the discipline that examines the performance and behavior of an economy as a whole.

Macroeconomics

Which discipline studies the economy as a whole or its basic subdivisions or aggregates? Multiple choice question. Normative economics Macroeconomics Positive economics Microeconomics

Macroeconomics

Which discipline studies the decision-making process of customers, workers, households, and business firms on an individual basis rather than as aggregates? Positive economics Macroeconomics Microeconomics Negative economics

Microeconomics

Which of the following resources would be considered to be land by an economist? Multiple select question. Oil and mineral deposits Arable land Factories Water Forests

Oil and mineral deposits Arable land Water Forests

What is the cause of a society's increasing opportunity costs with respect to the production of goods? Multiple choice question. Resources that are perfectly flexible Resources that are not fully interchangeable Budget line constraints A society's unlimited wants

Resources that are not fully interchangeable

______ economic resources means limited goods and services. Physical Tangible Scarce Insatiable

Scarce

In macroeconomics, an aggregate is a collection of which of the following? Multiple choice question. General economic units treated as if they were one unit General economic units treated as many units Specific economic units treated as if they were many units Specific economic units treated as if they were one unit

Specific economic units treated as if they were one unit

______ economies must forgo some of one good to gain more of another, whereas ______ economies are able to increase production of both goods. Multiple choice question. Dynamic; static Growing; no-growth Static; dynamic Stagnant; no-growth

Static; dynamic

Which of the following are illustrated by the following figure? (Check all that apply.) The resources used to produce industrial robots and pizzas are not perfectly flexible and interchangeable. As one moves to the right and produces more pizzas, the number of robots that must be given up remains constant. The resources used to produce industrial robots and pizzas are perfectly flexible and interchangeable. As one moves to the right and produces more pizzas, the number of robots that must be given up rises.

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.

Suppose an economy produces consumer goods and capital goods. Its current combination of production involves a higher level of capital goods than consumer goods. Which of the following can be inferred from this current choice on its production possibilities curve? Multiple choice question. That its future choice in production may result in higher present prospects for economic growth That its present choice in production may result in higher future prospects for economic growth That its present choice in production may result in lower future prospects for economic growth That its present choice in production has no effect on future prospects for economic growth

That its present choice in production may result in higher future prospects for economic growth

Which of the following are issues most explored in microeconomics? Multiple select question. The expenditures of a government entity The level of public debt Measuring total revenues of a firm Unemployment and inflation rates Measuring the price of specific goods

The expenditures of a government entity Measuring total revenues of a firm Measuring the price of specific goods

A production possibilities curve with an increasing slope is the result of which of the following? Multiple choice question. The scarcity of resources The law of increasing opportunity costs The other-things-equal assumption The economizing problem

The law of increasing opportunity costs

Which best defines utility? The satisfaction or pleasure obtained from consuming a good or service The satisfaction or pleasure obtained from producing a good or service The utilization of economic resources by producers when engaging in production The utilization of economic resources by consumers when engaging in consumption

The satisfaction or pleasure obtained from consuming a good or service

Which statement best describes combinations of goods that are beyond the production possibilities curve? Multiple choice question. They are efficiently produced. They are unattainable. They are attainable. They are inefficiently produced.

They are unattainable.

Which statements best describe the combinations of goods that lie on the production possibilities curve? Multiple select question. They represent an underallocation of resources. They are unattainable. They utilize all of an economy's available resources. They are attainable.

They are unattainable. They utilize all of an economy's available resources.

When people get satisfaction from charitable giving, they are ______. acting selfishly acting out of rational self-interest decreasing their utility decreasing their opportunity costs

acting out of rational self-interest

When economists consider the output of all U.S. businesses as a single entity, they are treating them as a(n) ______. normative unit microcomponent aggregate average

aggregate

When economists consider the output of all U.S. businesses as a single entity, they are treating them as a(n) ______. Multiple choice question. aggregate microcomponent average normative unit

aggregate

Points ______ the production possibilities curve represent a maximum output of two products as long as the economy is fully employed. Multiple choice question. below along inside beyond

along

Points ______ the production possibilities curve represent a maximum output of two products as long as the economy is fully employed. Multiple choice question. beyond along below inside

along

Choosing one good or service over another based on a comparison of marginal benefits and marginal costs always involves ______. a degree of selfishness an unlimited economic resource an opportunity cost a "free lunch"

an opportunity cost

Choosing one good or service over another based on a comparison of marginal benefits and marginal costs always involves ______. Multiple choice question. a degree of selfishness an opportunity cost an unlimited economic resource a "free lunch"

an opportunity cost

The highest-valued alternative that is given up or sacrificed when choosing to produce or consume one good over another is referred to as ______. a variable cost an economic choice a fixed cost an opportunity cost

an opportunity cost

Positive economics ______ value judgments, tries to establish ______ statements about economic behavior, and deals with ______ economic events. Multiple choice question. encourages; normative; potential encourages; scientific; actual avoids; scientific; actual avoids; normative; actual encourages; scientific; potential

avoids; scientific; actual

Normative economics is ______. Multiple choice question. based on the use of the scientific method based on value judgments applicable only to macroeconomics based on facts

based on value judgments

Factories, storage, transportation, and machinery are all examples of ______ goods. Multiple choice question. capital entrepreneurial ability land labor

capital

Factories, storage, transportation, and machinery are all examples of ______ goods. Multiple choice question. land capital entrepreneurial ability labor

capital

The straight-line budget constraint indicates ______ opportunity cost. Multiple choice question. increasing constant average decreasing

constant

Consumers must make choices about what to buy and what to forgo to fulfill wants because ______. Multiple choice question. consumers' wants are limited consumers' incomes are unlimited consumers act out of rational self-interest consumers' incomes are limited

consumers' incomes are limited

Consumers must make choices about what to buy and what to forgo to fulfill wants because ______. Multiple choice question. consumers' wants are limited consumers' incomes are unlimited consumers' incomes are limited consumers act out of rational self-interest

consumers' incomes are limited

Normative, value-based policy questions or statements give rise to ______. Multiple choice question. efficient markets controversy or disagreement among economists agreement and collaboration among economists inefficient markets

controversy or disagreement among economists

A statement about economic behavior or the economy that enables prediction of the probable effects of certain actions is known as a(n) ______. normative economic statement economic principle real-world outcome economic hypothesis

economic principle

Economic principles are generalizations that are ______. . expressed only as mathematical equations based only on normative judgments based solely on the assumption that all factors other than price remain constant expressed as the tendencies of average consumers, workers, or firms

expressed as the tendencies of average consumers, workers, or firms

True or false: Positive economics encourages value judgments.

false

Points lying ______ the production possibilities curve are attainable but reflect less total output than can be produced. Multiple choice question. inside along beyond on

inside

A manufacturing firm builds a new warehouse to expand its inventory capacity. Economists refer to this activity as ______. Multiple choice question. consumer production labor investment entrepreneurial ability

investment

A manufacturing firm builds a new warehouse to expand its inventory capacity. Economists refer to this activity as ______. Multiple choice question. labor entrepreneurial ability investment consumer production

investment

In economics, the term ______ describes spending that pays for the production and accumulation of capital goods. Multiple choice question. money entrepreneurship investment capital

investment

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

labor

What do economists call the physical actions and mental activities that people contribute to the production of goods and services? Multiple choice question. Entrepreneurial ability Labor Capital Investment

labor

From an economic standpoint, ______ includes all natural resources used in the production process. Multiple choice question. labor land supply capital

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. Multiple choice question. scarce; satiable limited; insatiable limited; finite unlimited; insatiable

limited; insatiable

Economic principles are generalized statements that ______ consumer behavior. look at typical marginalize focus on negative emphasize atypical

look at typical

Economists do not include money as an economic resource because ______. Multiple choice question. of its difficulty in valuating due to many world currencies the value of money is constantly fluctuating money produces nothing currency and coins are easily lost or destroyed

money produces nothing

Improvements in the methods of production allows for the creation of ______. Multiple choice question. the same amount of goods utilizing more resources fewer goods with more resources fewer goods with fewer resources more goods with available resources

more goods with available resources

______ economics considers the desirability of certain aspects of the economy and underlies expressions of support for particular economic policies. Multiple choice question. Positive Macroeconomics Microeconomics Normative

normative

The disagreement among economists typically revolves around ______. Multiple choice question. positive economics normative economics microeconomics macroeconomics

normative economics

Due to scarce resources, society is faced with a(n) ______ cost when choosing to acquire a good by sacrificing the next best thing that could have been acquired with those resources. opportunity explicit marginal utility

opportunity

Trade-offs arising from limited resources give rise to ______. Multiple choice question. unlimited wants opportunity costs scarce resources rational self-interest

opportunity costs

The assumption behind purposeful behavior is that ______. people act in such a way as to rationally pursue their own interests people and institutions are perfect decision makers individuals make random or chaotic economic decisions buyers and sellers are removed from the sensitivities that can affect their decisions

people act in such a way as to rationally pursue their own interests

The assumption behind purposeful behavior is that ______. Multiple choice question. buyers and sellers are removed from the sensitivities that can affect their decisions people act in such a way as to rationally pursue their own interests individuals make random or chaotic economic decisions people and institutions are perfect decision makers

people act in such a way as to rationally pursue their own interests

Unemployment in the economy is graphically represented by ______ the production possibilities curve. Multiple choice question. points inside a change to a new point on a movement outside a rightward shift of

points inside

This ______ table lists the different combinations of pizza and robots that can be produced with a specific set of resources. Multiple choice question. production possibilities product budget budget possibilities production function

production possibilities

When individuals and institutions make decisions with some desired outcome in mind, they are engaging in ______ behavior. random chaotic economically efficient purposeful

purposeful

In developing economic theories, principles, or models, economists ______. Multiple choice question. include all possible factors consider every possible outcome remove clutter and simplify ignore possible variables

remove clutter and simplify

Arable land, water, machinery, and professional athletes are all considered economic_______________ used in the production of goods and services.

resources

When an economy produces a good such that the marginal benefit equals the marginal cost, this indicates that ______. Multiple choice question. the unemployment rate is at its minimum resources are being allocated efficiently society's well-being would increase by decreasing the output of the good society would be better off by increasing the output of the good

resources are being allocated efficiently

Scarcity of economic resources _____. restricts options and demands choices leads to the production of unlimited goods and services results in deflation results in poverty and unequal distribution of wealth

restricts options and demands choices

Land and mineral resources, transportation and communication facilities, factories and farm buildings, equipment, tools and machinery are all examples of _______. Multiple choice question. insatiable wants scarce economic resources unlimited economic resources economic growth

scarce economic resources

Land and mineral resources, transportation and communication facilities, factories and farm buildings, equipment, tools and machinery are all examples of _______. Multiple choice question. scarce economic resources unlimited economic resources economic growth insatiable wants

scarce economic resources

The ratio of the price of two goods on a graphed budget line is measured by its__________(fill in the blank)

slope

In a world of scarcity, ______. the decision to obtain the marginal benefit (MB) of a specific option always includes the marginal cost (MC) of forgoing something else consumers or producers will always behave in a manner in which marginal benefits (MB) are less than marginal costs (MC) the decision to obtain the marginal benefit associated with some specific option includes the total cost of forgoing something else consumers or producers will always behave in a manner in which marginal benefits (MB) are less than average costs (AC)

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

Your next-door neighbors want to go on a European vacation but cannot afford it, so they decide to visit a local amusement park instead. This is an example of ______. Multiple choice question. the economizing problem a hypothesis the utility problem ceteris paribus

the economizing problem

The outward bowing shape of the production possibilities curve is due to ______. Multiple choice question. the law of diminishing marginal utility the law of decreasing opportunity costs the diminishing marginal benefits the law of increasing opportunity costs

the law of increasing opportunity costs

The optimal allocation of resources occurs when ______. Multiple choice question. the marginal benefit of the good is greater than the marginal cost the marginal benefit of the good equals the marginal cost the production of the two goods is equal the marginal cost of producing the good is equal to zero

the marginal benefit of the good equals the marginal cost

In this figure, obtaining more books by giving up some movies is called a(n) ______; whereas losing two books in order to gain 1 movie is referred to as ______ cost. Multiple choice question. trade-off; a production opportunity; trade-off budget; a production trade-off; an opportunity

trade-off; an opportunity

A trade-off occurs when some quantity of production of a good is given up in order to produce another good.

true

True or false: A decrease in income will shift the budget line to the left.

true

People desire goods and services that provide maximum utility. In fact, our desires or wants are ______. Multiple choice question. limited unlimited supply-driven reasonable

unlimited

The pleasure, satisfaction, or happiness obtained from consuming a good or service is known as

utility

Because consumers behave in a rationally self-interested manner, the consumer will purchase a good or service ______. when the marginal benefit is greater than the marginal cost by examining only marginal benefits when opportunity costs are greater than marginal benefits by examining only marginal costs

when the marginal benefit is greater than the marginal cost