Microeconomics CH 1
Opportunity cost is defined as
the highest valued alternative that must be given up to engage in an activity.
Economic models
are simplified versions of reality.
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
Economists assume that
optimal decisions are made at the margin.
Every society faces economic trade-offs. This means
producing more of one good means less of another good can be produced.
Which of the following statements is false?
Trade-offs do not apply when the consumers purchase a product for which there is excess supply, such as a stock clearance sale.
Which of the following is a positive economic statement?
Unemployment insurance payments increase when the unemployment rate rises.
Which of the following is a macroeconomic question?
What determines the minimum wage?
Which of the following is part of an economic model?
assumptions, hypotheses, data
Economics is the study of the ________ people make to attain their goals, given their ________ resources.
choices, scarce
The basic economic problem of scarcity
has always existed and will continue to exist.
Scarcity refers to the situation in which
unlimited wants exceed limited resources.
Who receives the goods and services produced in the United States depends largely on
How income is distributed
Which of the following is a microeconomic question?
How does Fiat decide on the price of the 500 Pop model?
In 2017, President Trump considered imposing a tariff on automobiles assembled by U.S. manufacturers in Mexico that were to be sold in the United States. If this tariff was imposed and as a result, some of these manufacturers moved their automobile assembly from Mexico back to the United States, these firms would be reacting to which of the three key economic ideas?
People respond to economic incentives
Which of the following is a positive economic statement?
The minimum wage law causes unemployment.
Which of the following is a normative economic statement?
The price of milk is too high.
Consider the following statements: a. Consumers rent more kayaks from a vendor that rents kayaks at a lower price than other rival kayak vendors along Waikiki beach. b. Department stores take steps to increase security since they believe it is more costly to allow shoplifting than to install expensive security monitoring equipment. c. Farmers produce more cotton when its selling price falls. Which of the above statements demonstrates that economic agents respond to incentives?
a & b