Microeconomics chapter 1 study material part 4

What type of statement would "A minimum wage actually reduces employment" be considered?

A. a positive statement (Positive statements describe "what is." A positive analysis of the minimum wage law would use a model to estimate how many workers lost their jobs because of the law, its impact on firms, and the gains to workers who received the minimum wage.)

What does an economy achieve by producing a good or service at the least possible cost?

A. productive efficiency (Productive efficiency occurs when a good or service is produced at the lowest possible cost.)

When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?

B. a market (b This is the definition of a market.)

Which of the following is achieved when a good or service is produced up to the point where the marginal benefit to consumers is equal to the marginal cost of producing it?

B. allocative efficiency. (This is a state of the economy in which production reflects consumer preferences; in particular, every good or service is produced up to the point where the last unit produced provides a marginal benefit to consumers equal to the marginal cost of producing it.)

Which of the following is the best classification for the economies of the United States, Canada, Japan, and Western Europe?

B. mixed economies. (A mixed economy is an economy in which most economic decisions result from the interaction of buyers and sellers in markets, but where the government plays a significant role in the allocation of resources.)

What is the purpose of an economic hypothesis?

B. to establish a causal relationship (An economic hypothesis is usually about a causal relationship, or how one thing affects another.)

Which of the following statements best defines scarcity?

B: Scarcity is a situation in which unlimited wants exceed the limited resources available to fulfill those wants. This is the textbook definition of scarcity.)

Which of the following is an example of a positive question?

C. If the college increased tuition, would class sizes decline? (This question objectively examines a relationship between tuition and class sizes, or "what is.")

Which of the following is not among the fundamental economic questions that every society must solve?

C. What goods and services will be exchanged? ( The three questions are: What goods and services will be produced? How will the goods and services be produced? Who will receive the goods and services produced?)

In what type of economy does the government decide how economic resources will be allocated?

C. a centrally planned economy (A centrally planned economy is an economy in which the government decides how economic resources will be allocated.)

In Solved Problem 1-1: "Apple Computer Makes a Decision at the Margin" which of the concepts below is most applicable in solving the problem?

C. marginal analysis (In solving the problem, the most applicable concept is that optimal decisions are made at the margin. An activity should be continued to the point where the marginal benefit is equal to the marginal cost.)

What type of economic analysis is concerned with the way things ought to be?

C. normative analysis (Normative analysis is analysis concerned with "what ought to be.")

Which of the following terms summarizes the situation in which a buyer and a seller exchange a product in a market and, as a result, both are made better off by the transaction?

C. voluntary exchange (This occurs in markets when both the buyer and the seller of a product are made better off by the transaction.)

Which of the following best describes the characteristics of models used in economics?

D. Models are simplifications of reality that include only essential elements and exclude less relevant details. (Economic models are simplified versions of some aspects of economic life used to analyze economic issues.)

Which of the following questions can be answered using normative economic reasoning?

D. Should a college cut tuition to stimulate enrollments? (This is a question of "what ought to be.")

What types of economies require that answers be given to the following questions: what goods and services will be produced, how will the goods and services be produced, and who will receive the goods and services produced?

D. all of the above These questions refer to the economic problem every society must solve. <they were: market economies , centrally planned economies, and mixed economies. for the answer examples.

Fill in the blanks. In economics, as well as in life, optimal decisions are made _____________.

D. at the margin ( The textbook presents three important ideas: People are rational; people respond to economic incentives; optimal decisions are made at the margin.)

Which of the following terms best refers to a fair distribution of economic benefits?

D. equity (Equity, or fairness, refers to the fair distribution of economic benefits.)

Which of the following is not an essential component of an economic model?

D. normative statements (Normative statements, statements concerned with what ought to be, are not components of an economic model.)

Which of the following questions could be answered using economics?

D: All of the above are economic questions. (In this textbook, we use economics to answer questions such as those found in all of the choices given.) <The examples were""How are the prices of goods and services determined?" b. "How does pollution affect the economy, and how should government policy deal with these effects?" c. "Why do firms engage in international trade, and how do government policies affect international trade?">