Chapter 1 Econ

Which of the following is a problem inherent in centrally planned economies?

Production managers are more concerned with satisfying government's orders than with satisfying consumer wants

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

Productive efficiency

Which of the following is a macroeconomics question?

What determines the growth rate of gross domestic product?

Which of the following is a macroeconomics question?

What determines the inflation rate

Which of the following is a microeconomics question

What facts determine the price of carrots?

The three fundamental questions that any economy must address are

What good and services to produce, how will they be produced and who will receive them

Economic models

are simplified versions of reality

Economics is the study of the___people make to attain their goals, given their___resources

choices; scarce

___increase economic efficiency because it forces firms to produce and sell goods and services as long as the additional benefit to consumers is greater than the additional cost of production

competition

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

The branch of economics which studies the behavior of entire economies is called

macroeconomics

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

marginal benefit equals the marginal cost

A grocery store sells a bag of potatoes at a fixed price of $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes.

marginal revenue

An economic____is a simplified version of a some aspect of economic life used to analyze an economic issue

model

Every society faces economic trade-offs. This means

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

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

receive the most of what is produced

Be definition, economics is the study of

the choices ppl make to attain their goals, given their scarce resources

Consider the following agents: the government, consumers, and producers. Who, in a centrally planned economy, decides what goods and services will be produced with the same resources available in the economy?

the government

Opportunity cost is defined as

the highest valued alternative that must be given up to engage in an activity

Which of the following is a positive economic statement?

the minimum wage law causes unemployment

Which of the following correctly describes the relationship b/w economic efficiency and economic equity?

there is often a trade-off b/w the two

Scarcity refers to the situation in which

unlimited wants exceed limited resources.

Allocative efficiency best explains___and productive efficiency best explains

what will be produced, how something will be produced

Which of the following is a normative economic statement?

The price of gasoline is too high