Quiz 1

Which of the following is a positive economic statement?

If the price of iPhones falls, a larger quantity of iPhones will be purchased

The highest valued alternative that must be given up to engage in an activity is the definition of

Opportunity Cost

_____________________ is a situation in which a good or service is produced at the lowest possible cost.

Productive efficiency

Which of the following statements is true about scarcity?

Scarcity refers to the situation in which unlimited wants exceed limited resources.

The three fundamental questions that any economy must address are

What goods and services to produce; how will these goods and services be produced; and who receives them?

Economists assume that individuals

are rational and respond to incentives.

The decision about what goods and services will be produced made in a market economy is made by

consumers and firms choosing which goods and services to buy or produce

Microeconomics is the study of

how households and firms make choices

Economists reason that the optimal decision is to continue any activity up to the point where the

marginal benefit equals the marginal cost

An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue.

model

All of the following are part of an economic model except a. Assumptions b. Data c. Hypotheses d. Opinions

opinions

Economic models do all of the following except: a. portray reality in all its minutes details b. answer economic questions c. simplify some aspect of economic life. d. make economic ideas explicit and concrete for use by decision makers

portray reality in all its minutes details

By definition, economics is the study of

the choices people make to attain their goals, given their secure resources

Macroeconomics is the study of

the economy as whole

The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of

trade-off