Chapter 2

which of the following are resources which businesses purchase from households?

-labor -land -capital -entrepreneurial ability

in the circular flow model, in which of the following markets do households obtain the income needed to buy the goods and services?

-labor market -resource market

the 3 main categories into which businesses fall are:

-sole proprietorship -corporation -partnership

Cross Price Elasticity of Demand

Percentage change in the quantity demanded of X divided by the percentage change in price of Y.

Factories, storage, transportation and distribution facilities, as well as tools and machinery are all examples of physical ____________ goods.

capital

For economists ________ goods are those goods used to produce final consumer goods and services.

capital

For economists, ___ goods are goods that are used to produce final consumer goods and services.

capital

communism exhibits all the characteristics of a ________ system.

command

_____________ comes in the form of wages, interest, rent, profit, and even from goverment programs. a. Spending b. Taxes c. Transfers d. Income

d. Income

United States net exports are......

equal to the value of exports minus the value of imports

which of the following is the reason why every society needs to develop an economic system?

every society has unlimited wants but limited resources

Property rights encourage:

exchange maintenance of property innovation economic growth investment

T/F: money complicates exchange or trade

false

_____ comes in the forms of wages, interest, rent, profit, and even from government programs

income

The branch of economics that studies the decision-making process of individual workers, households, and firms is known as

microeconomics

Economists do not include money as an economic resource because:

money produces nothing

in a market system, firm _____ are subject to business risk

owners

The primary way to distinguish among partnerships, corporations, proprietorships is by observing what?

ownership characteristics

the way to get ahead in a command economy, such as in the economies of the former soviet union, eastern europe, and china prior to amrket reforms, was through:

participation in the political hierarchy of the communist party

intellecutal property is an extension of property rights through:

patents trademarks copyrights

The assumption behind purposeful behavior means that:

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.

points inside

Unemployment in the economy is represented by:

points inside the production possibilities curve

____ economic analysis concerns what is, whereas ____ economic analysis embodies subjective feelings about what ought to be.

positive; normative

Land and mineral resources, transportation and communication facilities, factories and farm buildings, equipment, tools and machinery are all examples of _______.

scarce economic resources

in the circular flow model, households _______ resources and __________ products

sell; buy

T/F: in order to serve as money, an item must be widely accepted by the parties involved in a transaction as currency.

true

Combinations of goods that fall on the PPC:

utilize all of an economy's resources; are attainable; are efficiently produced

For better or worse, people have ______.

virtually unlimited wants

What are considered land to an economist?

water, oil and mineral deposits, forests, arable land, sunlight

The economic assumption that human behavior reflects rational self-interest is predicated on individuals:

weighing the costs and benefits of their decisions

Combinations of goods that fall on the production possibilities curve are ____

Attainable

Combinations of output that fall inside the production possibilities curve have goods that are ____.

Attainable

Which of the following includes all natural resources used in the production of goods and services?

Land

The factors of production include:

Land Labor Capital Entrepreneurship

The factors of production are?

Land Labor Entrepreneurship

Combinations of output that fall inside the production possibilities curve represent ____ total output in an economy.

Less

Why is it in our self-interest to economize or pick and choose goods and services that maximize our satisfaction? Because of our ____ incomes conflicting with our insatiable wants for goods and services.

Limited

Consumers must forego choice based on a limited budget because consumers spend their ____ budget purchasing a combination of goods that ____ their utility.

Limited Maximize

Price Floor

Lower limit set for price of a good.

Marginal Rule of Thumb

MU¬x / P¬¬x = MUy/Py

The branch of economics that studies the economy as a whole or in the aggregate is known as:

Macroeconomics

What is the discipline that examines either the economy as a whole or in the aggregate?

Macroeconomics

The economic term that means incremental changes or additional changes is ____.

Marginal

Which of the following leads to market failure?

Market power.

A production possibilities curve indicates the

Maximum combinations of goods and services an economy can produce given its available resources and technology.

Government intervention in the economy:

May fix market failures or make the economy worse off.

Transfer Payments

Payments to individuals for which no current goods or services are exchanged, like Social Security, welfare, and unemployment benefits.

Education and job training are part of _______

human capital investment

Entrepreneurial ability as well as human ability is an economic ________.

resource

Households obtain income in the _________ market in order to buy the goods and services that businesses produce in the _________ market.

resource; product

______ economic resources means limited goods and services.

scarce

True or false: Everyone except for the super wealthy has a finite, or limited, amount of income.

False

True or false: Positive economics encourages value judgements.

False

True or false: Positive economics encourages value judgments.

False

Economics assumes that human behavior reflects "_______ self-interest."

"Rational self-interest"

The economic question of "__________ to produce" is about decisions related to the mix (quantity and type) of goods and services to make available in a given economy

"what to produce"

Determinants of Market Demand

- Tastes (desire for this and other goods) - Income (of the consumer) - Other Goods (Their availability and price) - Expectations (for income, prices, tastes) - Number of Buyers

The 3 main decisions that must be addressed by an economic system include:

1. WHAT goods and services to produce 2. HOW output is produced 3. For WHOM output is produced

Which of the following best represents the relationship between a capital good and a consumer good or service?

A commercial baking oven and loaves of bread

Capital

A computer

Emission charge

A fee imposed on polluters, based on the quantity of pollution.

Which of the following best describes the relationship between trade-offs and opportunity cost?

As you give up consumption or production of one good over another (the trade-off), an opportunity cost is incurred

Which of the following best describes the relationship between trade-offs and opportunity costs?

As you give up consumption or production of one good over another, an opportunity cost is incurred.

Which of the following enables society to produce more goods with current resources?

Advances in technology

In macroeconomics, an ____ is a collection of specific economic units treated as if they were one unit.

Aggregate

Businesses

Aim to maximize profits

Government failure

Government intervention that fails to improve economic outcomes.

A private good is a good that:

Can be denied to those who do not pay for it.

In economics, a public good

Cannot be denied to consumers who have not paid.

Factories, storage, transportation and distribution facilities, as well as tools and machinery are all examples of physical ____ goods.

Capital

The four general categories of economic resources are ____, ____ resources, entrepreneurship, and_____

Capital Natural Labor

Which of the following is most likely a private good?

Cars

After the government filed its antitrust case, Microsoft:

Changed some of its exclusionary licensing practices.

As individuals', incomes rise, they will still be confronted with which of the following?

Choices Opportunity Cost Trade-offs

Which of the following combinations are unattainable given a consumer's budget line?

Combinations that fall beyond the budget line

Antitrust

Government intervention to alter market structure or prevent abuse of market power.

Capital goods differ from consumer goods in that capital goods satisfy consumer wants ____ through the production of consumer goods

Indirectly

All of the following are macro failures that justify government intervention except for:

Inequitable distribution of output.

What is the discipline of economics concerned with individual units such as a person, household, firm or industry?

Microeconomics

______ economics considers the desirability of certain aspects of the economy and underlies expressions of support for particular economic policies.

Normative

____ economics focuses on facts and cause-and-effect relationships.

Positive

Specialization is about an individual or firm using available resources to:

Produce one or only a few goods and services

Factors of Production

Resource inputs used to produce goods and services, such as land, labor, capital and entrepreneurship.

Market Power

The ability of a single producer to alter the market price of a good or a service.

In a world of ____, the decision to obtain the marginal benefit associated with some specific option always includes the marginal cost of forgoing something else.

Scarcity

Economic growth is the result of ____ advances.

Technological

Economic growth is the result of which of the following?

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

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?

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

The following figure illustrates which of the following?

That the resources used to produce industrial robots and pizzas are not perfectly flexible and interchangeable. That as one moves to the right and produces more pizzas, the number of robots that must be given up rises.

Market Shortage

The amount by which the quantity demanded exceeds the quantity supplied at a given price; excess demand.

Market Surplus

The amount by which the quantity supplied exceeds the quantity demanded at a given price; excess supply.

Social costs

The full resource costs of an economic activity, including externalities.

Which of the following produces external benefits?

The inoculation of college students against the flu.

An economy can produce either guns or butter with all available resources. Suppose it currently produces all butter and it chooses to produce some guns, thereby giving up some production of butter. As a result, the first 200 units of guns are produced at the cost of only 50 units of butter. Not surprisingly, the next 200 units of guns are produced at the cost of 150 units of butter and the last 200 units of guns at the cost of 300 units of butter. What does this describe?

The law of increasing opportunity costs

Which of the following are economic measures are considered in macroeconomic analysis?

The level of prices in the economy The unemployment rate International trade National income

Which of the following exemplifies that topics and subdivisions of economics can be rooted in both macroeconomics and microeconomics?

The unemployment rate and the decisions of individual firms and workers to encourage or impede hiring, as well as to search for work, respectively.

Market mechanism

The use of market prices and sales to signal desired outputs (or resource allocations)

Which points or combinations of produced goods on a production possibilities curve are not attainable with the current level of resources?

Those lying outside the curve

Other things being equal, if a perfectly competitive firm is forced to switch to a more expensive, nonpolluting production process:

Total profits will decrease.

For better or worse, people have virtually ____ wants.

Unlimited

The following figure illustrates the concept of a: a. budget line b. production possibilities frontier c. demand curve d. supply curve

a. budget line

The outward bowing shape of the production possibilities curve is due to a. the law of increasing opportunity costs. b. the law of decreasing opportunity costs. c. the law of diminishing marginal utility. d. the diminishing marginal benefits.

a. the law of increasing opportunity costs.

entrepreneurs trying to maximize profits and minimize losses, property owners trying to get the highest price for the sale or rental of their resources, and workers trying to maximize their satisfaction by finding jobs that offer the best combination of wages, hours, benefits, and working conditions are all examples of:

acting in one's self-interest

the two major benefits that arise from the market system's restriction of business risk to owners and investors are

attracting inputs and focusing attention

The scientific method, on which economics rely, consists of several elements, including: (check all that apply) a. observing real-world behavior and outcomes and formulating a law based on said observations b. continuing to test the hypothesis against facts. c. observing real-world behavior and outcomes and formulating a hypothesis based on said observations d. accepting, rejecting, and adjusting a hypothesis.

b. continuing to test the hypothesis against facts. c. observing real-world behavior and outcomes and formulating a hypothesis based on said observations d. accepting, rejecting, and adjusting a hypothesis.

A(n) ___________ in income will shift the budget line to the left. a. increase b. decrease c. no change

b. decrease

_____ ability is a special kind of economic resource, which is distinct from labor

entrepreneurial

For better or worse, people have virtually ____________ wants. a. supply-driven b. unlimited c. limited

b. unlimited

the ______ system, which involves swapping goods for goods, requires coincidence of wants between the buyer and the seller.

barter

the ________ system, which involves swapping goods for goods, requires coincidence of wants between the buyer and the seller

barter

Normative Economics is

based on subjective or value judgements

What is normative economics?

based on subjective or value judgments

Why is it in our self-interest to economize or pick and choose goods and services that maximize our satisfaction?

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

Economists develop theories of the ______ of individuals (consumers/workers) and institutions (businesses/governments) engaged in the production, exchange, and consumption of goods and services:

behavior

Points ____________ the production possibilities curve (PPC) are produced efficiently so long as an economy uses all of its available resources. a. beyond b. inside c. along d. below

c. along

Society's economizing problem involves: (check all that apply) a. devoting equal amounts of resources to goods and services such as health care, energy, and education b. devoting more resources to physical capital goods that deliver consumer goods and lead to economic growth and higher standards of living. c. making choices in the face of scarcity. d. scarce resources. e. opportunity cost.

c. making choices in the face of scarcity. d. scarce resources. e. opportunity cost.

The economic decisions of different individuals are considered to be rational when these individuals:

compare benefits and costs

which of the following best serves as the regulatory mechanism of the market system?

competition

economic systems can be classified by the degree to which they rely upon ____ decision making based upon markets and prices or _____ government control based on orders and mandates

decentralized, centralized

AS an economy moves out of a recession into a period of economic growth consumers tend to increase expenditures on _____

durable goods

All natural resources, human resources, and manufactured goods that go into the production of goods and services are considered as society's scarce _______ resources.

economic

the market system thrives on freedom of _______ and _______.

enterprise; choice

according to the circular flow model, ________ will buy resources from and sell products to households

firms

in the circular flow model, households sell resources to, and buy products from _________.

firms

When consumers purchase a good or service, they do so in order to _______ their level of utility or well being

increase

which of the following can be stated as potentially true about any economy?

its current choice of positions on its production possibilities frontier helps determine its future location

In addition to entrepreneurship, the factor of production (resource) defined as __ consists of the physical actions and mental activities that people contribute to the production of goods and services.

labor

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.

limited; insatiable

the term "laissez-faire" refers to

limiting the government's interference in the economy

just as a producer that charges more than the competitive price will relinquish sales to other producers, so will an employer who pays less than the competitive wage rate will:

lose workers to other employers

Changes in Quantity Supplied

movements along the given supply curve

The disagreement among economists typically revolves around ______.

normative economics

A production possibilities curve (PPC) illustrates the attainable combination:

of two goods that can be produced given a specific set of resources

A production possibilities curve (frontier) shows the attainable combination:

of two goods that can be produced given a specific set of resources

______ property rights help to facilitate exchange in a free market system

private

economic growth, investment, innovation, exchange, and maintenance of property are all possible because of __________.

private property rights

according tot he circular flow model, households buy goods and services that businesses make available in the _______ market

product

the interaction between buyers and sellers in a market system determine _______ and _______

product; resource prices

This ______ table lists the different combinations of pizza and robots that can be produced with a specific set of resources.

production possibilities

An increase in income will ______.

shift the budget line to the right

An economy can produce either guns or butter with all available resources. Suppose it currently produces all butter and it chooses to produce some guns, thereby giving up some production of butter. As a result, the first 200 units of guns are produced at a cost of only 50 units of butter. The next 200 units of guns are produced at the cost of 150 units of butter and the last 200 units of guns at the cost of 300 unitys of butter. What does this describe?

the law of increasing opportunity costs

The outward bowing shape of the production possibilities curve is due to

the law of increasing opportunity costs

The optimal allocation of resources occurs when ______.

the marginal benefit of the good equals the marginal cost

The optimal allocation of resources is such that

the marginal benefit of the good equals the marginal costs

What is the laissez-faire?

the role of government is limited to protecting private property; the role of government is to ensure the free operation of the market system

Utility is defined as:

the satisfaction or pleasure obtained by consumers from consuming a good or service

Whenever net external benefits exist then:

the social demand exceeds the market demand.

GDP most closely measures what?

the total value of all final goods and services produced within a nations borders in a given year

The function of an entrepreneur is:

to combine scarce resources and to produce desired goods or services; to organize other factors of production in the production of new products

in a market economy, goods and services are distributed:

to consumers on the basis of their ability and willingness to pay their existing market price

Because consumers behave in a rationally self-interested manner, the consumer will purchase a good or service:

when the marginal benefit is greater than or equal to the marginal cost

T/F: Economists assume that human behavior reflects "irrational self-interest"

False

T/F: an economic hypothesis is a statement about economic behavior that is well-tested and widely accepted

False

which of the following does competition require?

-Freedom of sellers and buyers to enter or leave markets. -Two or more buyers and two or more sellers acting independently in a particular market.

A production possibilities curve shows the attainable combination...

of two goods that can be produced given a specific set of resources

A production possibilities curve shows the attainable combination:

of two goods that can be produced given a specific set of resources

A production possibilities curve shows the attainable combinations:

of two goods that can be produced given a specific set of resources

Points lying _____ the production possibilities curve are unattainable, with the current availability of resources and technology.

outside

Points lying _____ the production possibilities curve represent greater, but unachievable levels of output with current inputs, than that at any point on the curve

outside

Points lying ______ the production possibilities curve represent greater, but unachievable levels of output with current inputs, than that at any point on the curve.

outside

Changes in Supply

Shifts of the supply curve

A point that lies inside the production possibilities curve reflects which of the following?

A failure to achieve full employment

The term market power refers to

A firm's ability to alter the market price or quantity of a good or service.

Land

A forest

Merit Goods

A good or service society deems everyone is entitled to some minimal quantity of.

Public Good

A good or service whose consumption by one person does not exclude consumption by others.

Normative, value-based policy questions or statements give rise to ____ among economists.

Controversy

Marginal analysis involves the comparison or evaluation of the additional ____ versus the additional ____ of a decision.

Cost Benefit

Externalities

Costs (or benefits) of a market activity borne by a third party; the difference between the social and private costs (benefits) of a market activity.

Externalities

Costs (or benefits) of a market activity borne by a third party; the difference between the social and private costs (or benefits) of a market activity .

Recently, Chase Bank lowered its interest rate on business loans by 2 percentage points

Example of Microeconomics

A public good

Experiences the free-rider dilemma.

Government intervention may be appropriate to correct market outcomes because of

Externalities

Specializing and participating in international trade allows an economy to ____ the quantities of capital and consumer goods available to society.

Increase

Economic growth is the result of ____ in the supply of resources.

Increases

Which of the following describes the concept of rational self-interest?

Individuals look for and pursue opportunities to increase their utility or level of personal satisfaction Individuals allocate their resources to maximize their satisfaction Individuals weigh the costs and benefits of their decisions

Combinations of output that fall inside the production possibilities curve have ____ use of resources.

Inefficient

The importance of the production possibilities model is that it shows the different combinations of goods and services that society can produce efficiently, ____, in a fully employed economy, and given a fixed amount of ____.

Inefficiently Resources

Points lying ____ the production possibilities curve are attainable, reflecting less total output than can be produced.

Inside

Advances in production technology enable a society to produce ____ goods with current or less ____:

More Resources

The output of cell phones can be added to the output of refrigerators in order to compute GDP by ?

Multiplying the output of each by price and adding these dollar values

One HEADLINE article in the text links secondhand smoke to cancer and other health issues. Which type of market failure does the article illustrate?

Negative externality

Which statements best describe the combinations of goods that lie on the production possibilities curve?

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

Optimal mix of output

The most desirable combination of output attainable with existing resources, technology, and social values.

Opportunity Cost

The most desired goods and services that are forgone to obtain something else. What is given up to get something else.

Sources of microeconomic failure that may require government intervention include all of the following except:

The need for private goods.

Price Elasticity of Demand

The percentage change in quantity demanded divided by the percentage change in price.

Utility

The pleasure or satisfaction obtained from a good or service.

Externalities are a type of market failure because:

Third parties bears the costs or benefits of a market activity.

A ______ is defined as giving up one thing in order to have some other item

Trade-off

The situation where one thing has to be given up in order to have some other item is called a ____ ____

Trade-off

A decrease in income will shift the budget line to the left

True

Equilibrium Price

The price at which the quantity of a good demanded in a given time period equals the quantity supplied.

Law of Supply

The quantity of a good supplied in a given time period increases as its price increases, ceteris paribus.

Market Demand

The total quantities of a good or service people are willing and able to buy at alternative prices in a given time period; the sum of individual demands.

Market Supply

The total quantities of a good that sellers are willing and able to sell at alternative prices in a given time period, ceteris paribus.

Which of the following statements or questions represent positive economics?

The unemployment rate in Mexico is higher than in the U.S. As the price of airfare falls, airlines experience a spike in business If the government increases the minimum wage, the unemployment rate will rise

Which of the following is a sound economic reason why the government should subsidize your college education?

There are external benefits associated with education.

Which of the following is true of scarcity with respect to economic resources?

There aren't enough resources available to satisfy all our desires

Which statement best describes combinations of goods that are beyond the production possibilities curve?

They are unattainable.

Points lying _______ the production possibilities curve (frontier) are unattainable with the current availability of resources and technology.

outside

Points lying _______ the production possibilities curve (frontier) would represent a greater but unachievable level of output than that at any point on the curve

outside

To produce at a point lying ____ the PPC would require economic growth.

outside

_____ economics focuses on facts and cause-and-effect relationships

positive

A ______ lists the different combinations of two products that can be produced with a specific set of resources, assuming full employment.

production possibilities table

A _____ lists the different combinations of two products that can be produced with a specific set of resources, assuming full employement

productions possibilities table

Labor

Quantity and quality of human resources

Which of the following explains what would happen if public goods were marketed like private goods?

Public goods would be underproduced.

The federal government's role as the provider of national defense is justified by considerations of

Public goods.

The optimal mix of output may not be produced by an economy because of the existence of

Public goods.

Combinations of goods that are beyond the production possibilities curve would require ____ that are not currently available.

Resources

What is the cause of a society's increasing opportunity costs with respect to the production of goods?

Resources that are not fully interchangeable

The optimal mix of output is the most desirable combination of output attainable with existing

Resources, technology, and social values.

As individuals' incomes ____, they will still be confronted with choice, ____ ____, and trade-offs.

Rises Opportunity cost

All natural, human, and manufactured goods that go into the production of goods and services are considered society's ____ economic resources.

Scarce

The fundamental problem of economics is

The scarcity of resources relative to human wants.

Constant opportunity cost is best represented by:

The straight-line production possibilities

Monopoly

There is only one firm that produces the entire market supply of a particular good.

If public goods were marketed like private goods, then

There would be market failure.

Economic principles and models are tools for ascertaining ________ and _________ within an economic system.

cause; effect

From an economic standpoint, ______ includes all natural resources used in the production process.

land

An increase in income will:

shift the budget line to the right.

The ratio of the price of two goods on a graphed budget line is measured by its _______.

slope

which of the following is a more desirable method of production?

using a combination of labor, capital and technology

Which of the following define ceteris paribus?

-Factors other than those being considered in a particular analysis do not change - other-things-equal assumption

which of the following functions can a corporation do on its own behalf?

-incur debts -acquire resources -own assets -can sue

in order to have competition in a market economy, there must be at least ______ or more sellers acting independently in a particular market

2

T/F: A trade-off occurs when some quantity of production or consumption of a good or service is given up in order to produce or consume another good or service

True

True or False: A trade-off occurs when some quantity of production or consumption of a good or service is given up in order to produce or consumer another good or service.

True

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

True

True or false: 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 trade-off occurs when some quantity of production or consumption of a good or service is given up in order to produce or consume another good or service.

True (opportunity cost is the VALUE or COST associated with any trade-off)

Combinations of goods that are beyond the production possibilities curve are currently ____.

Unattainable

Which of the following are economic measures considered in macroeconomics? The ____ rate, national ____, the level of ____ in the economy, and ____ trade.

Unemployment Income Prices International

People desire goods and services that provide maximum utility. In fact, our desires or wants are:

Unlimited

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

Utility

Which of the following resources would be considered to be land by an economist?

Water Oil and mineral deposits Forests Arable land

The economic question of "_________ to produce" is about decisions related to the mix (quantity and type) of goods and services to make available in a given economy

What

The economic question of "_________ to produce" is about decisions related to the mix (quantity and type) of goods and services to make available in a given economy.

What

what how for whom

What are the 3 main choices decided in an economy?

Positive economics is concerned with _________, whereas normative economics deals with __________.

What is, what should be

The highest-valued alternative that is given up or sacrificed when choosing to produce or consume one good over another is referred to as ________.

an opportunity cost

Capital goods differ from consumer goods in that:

capital goods satifsy consumer wants indirectly through the production of consumer goods consumer goods satisfy wants directly

Economic principles and models are highly useful in determining _____ and ______ relationship

cause and effect

in a command economy, how is the division of output between capital and consumer goods determined?

centrally decided

other-things-equal; the idea that factors other than those being considered in a particular analysis do not change

ceteris paribus

a producer that charges more than the ______ will relinquish sales to other producers in a market economy

competitive market price

which of the following describes how the market system will promote progress?

competitive markets create incentives for technological advance and capital accumulation, both of which contribute to promoting progress

The straight-line budget constraint indicates _______ opportunity cost?

constant

What goods satisfy directly? What goods satisfy indirectly?

consumer goods, capital goods

____ goods satisfy wants directly, whereas ____ goods do so indirectly

consumer; capital

Consumers must forego choices based on a limited budget because:

consumers spend their limited budget purchasing a combination of goods that maximize their utility

Consumers must make choices about what to buy and what to forgo to fulfill wants because ______.

consumers' incomes are limited

in the circular flow model, the market economy creates

continuous, repetitive flows of goods and services, resources and money.

Private property rights, coupled with the freedom to negotiate binding legal _______ enables individuals and businesses to obtain, use and dispose of property resources as they see fit.

contracts

which of the following are made possible because of private property rights in a market system?

economic growth, investment, innovation, exchange, and maintenance of property

The _________ problem refers to the need to make choices because economic wants exceed economic means

economizing

What does each point on the PPC represent?

efficiency in production; the maximum potential output of two or more products

Freedom of ____________ ensures that entrepreneurs and private businesses are free to obtain and use economic resources to produce their choice of goods and services.

enterprise

In addition to lacking incentives, the command economies of the former Soviet Union, Eastern Europe, and China prior to market reforms also lacked ________.

entrepreneurship

economic principles are generalizations that are:

expressed as the tendencies of average consumers, workers or firms

T/F: in a command economy, business success measured by political savvy is conductive to technological advance

false

T/F: in a market system, the government owns most of the property resources such as land and capital

false

T/F: specialization means using available resources to produce a variety of goods and services

false

T/F: the command economies of the former soviet union, eastern europe, and china prior to market reforms rewarded innovatino, enterprise, and entrepreneurship

false

T/F: the resource market is the place where resources or the services of resource suppliers are produced

false

The economic question of "___ to produce" is about decisions related to who is going to consume the goods and services produced.

for whom

An active, but limited government is characteristic of which market system in modern advanced industrial economies?

free market system

The purpose of the U.S tax transfer system is to ____?

furnish lower income households with more goods and services than the market alone provides

division of labor that works on a regional or international basis is known as _____ specialization

geographic

which of the following is/are found in the product market?

goods and services

Arable land, water, machinery, and a pro baseball player are all considered scarce economic ___ to production.

inputs

What is the simplified term economists use to refer to "factors of production"?

inputs

Points lying ___ the production possibilities curve are attainable, reflecting less total output than can be produced

inside

Points lying ______ the production possibilities curve are attainable but reflect less total output than can be produced.

inside

What consists of the physical and mental activities that people contribute to the production of goods and services?

labor

From an economic standpoint______ including all natural resources used in the production process

land

The factors of production are

land, labor, capital, and entrepreneurship

To economists, land includes all __________, or gifts of nature, used in the production process.

natural resources

True or false: A trade-off occurs when some quantity of production or consumption of a good or service is given up in order to produce or consume another good or service.

True

True or false: Economics assumes that human behavior reflects "rational self-interest." This means they allocate their time, energy, and money to maximize their satisfaction.

True

Which of the following scenarios are illustrated in the give PPC? (check all that apply) a. An economy in full employment along the curve b. Unemployment at point W c. Output combination C is better than the output combination B d. Attainable combinations of both goods below the curve

a. An economy in full employment along the curve d. Attainable combinations of both goods below the curve

Which of the following describes the concept of rational self-interest? (check all that apply) a. Individuals look for and pursue opportunities to increase their utility. b. Individuals allocate their resources according to society's purposeful behavior. c. Individuals weigh the costs and benefits of their decisions. d. Individuals allocate their resources to maximize their satisfaction. e. Individuals look for and pursue opportunities to maximize social welfare.

a. Individuals look for and pursue opportunities to increase their utility. c. Individuals weigh the costs and benefits of their decisions. d. Individuals allocate their resources to maximize their satisfaction.

Recently, you decided to super-size your fries at McDonald's. On the one hand, your decision to super-size considered the additional costs associated with the super-size, including the additional monetary, caloric and cholesterol intake, as well as the extra time you had to wait for those fries because a new batch was being prepared. On the other hand, you determined that the extra benefits from super-sizing included a few more mouthfuls of satisfaction from an increased portion of fries. The benefits clearly outweighed the costs since you chose to super-size. Which of the following does this illustrate? a. Marginal analysis b. The law of demand c. Delayed gratification d. Diminishing marginal utility e. Random behavior

a. Marginal analysis

Which of the following statements or questions exemplify normative economics? (check all that apply) a. The government ought to bail out distressed banks. b. What will be the result of a Continental Airlines and United Airlines merger? c. The government should increase the minimum wage. d. What should the Federal minimum wage be? e. When the price of gas rises, the quantity consumed falls.

a. The government ought to bail out distressed banks. c. The government should increase the minimum wage. d. What should the Federal minimum wage be?

Which of the following exemplifies that topics and subdivisions of economics can be rooted in both macroeconomics and microeconomics? a. The unemployment rate and the decisions of individual firms and workers to encourage or impede hiring, as well as to search for work, respectively. b. The unemployment rate and the decisions by the government to foster economic growth through job creation. c. The unemployment rate and the decisions by the government to offer tax and credit incentives to producers as a means to create job growth. d. The unemployment rate and the labor force rate.

a. The unemployment rate and the decisions of individual firms and workers to encourage or impede hiring, as well as to search for work, respectively.

Which of the following statements or questions exemplify positive economics? (check all that apply) a. The unemployment rate in Mexico is higher than in the United States. b. Should the unemployment rate in the United States be lower than in Mexico? c. When the government increases the minimum wage the unemployment rate will rise. d. The government ought to increase the minimum wage so that incomes rise. e. As the flight ticket prices fall, airlines experience a sharp increase in revenue.

a. The unemployment rate in Mexico is higher than in the United States. c. When the government increases the minimum wage the unemployment rate will rise. e. As the flight ticket prices fall, airlines experience a sharp increase in revenue.

A point that lies inside the production possibilities curve reflects: a. a failure to achieve full employment. b. too many resources being allocated to the production of one good. c. an efficient use of resources. d. unattainable combinations of output.

a. a failure to achieve full employment.

Economists develop theories of the ______________ of individuals (consumers, workers) and institutions (businesses, governments) engaged in the production, exchanged, and consumption of goods and services. a. behavior b. demand c. interest d. investment

a. behavior

The importance of the production possibilities curve is that it shows the different combinations of goods and services that a society can produce: (check all that apply) a. efficiently. b. given a fixed amount of resources. c. given a fixed state of technology. d. given an unlimited amount of resources. e. when marginal benefit equals marginal cost. f. in a fully employed economy.

a. efficiently. b. given a fixed amount of resources. c. given a fixed state of technology. f. in a fully employed economy.

Economic growth is the result of: (check all that apply) a. improvements in resource quality. b. increases in the supply of resources. c. decreases in the demand for capital goods. d. technological advances.

a. improvements in resource quality. b. increases in the supply of resources. d. technological advances.

When consumers purchase a good or service, they do so in order to ______________ their utility. a. increase b. decrease c. equalize d. trade

a. increase

Economic growth is achieved through: (check all that apply) a. increased supplies of the factors of production. b. advances in technology. c. reduction in the quality of resources. d. decreased demand for the factors of production.

a. increased supplies of the factors of production. b. advances in technology.

In economics, the term _______________ describes spending that pays for the production and accumulation of capital goods. a. investment b. capital c. money

a. investment

To economists, land includes all ______________, or gifts of nature, used in the production process. a. investment b. natural resources c. input resources d. capital

a. investments (I think)

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. In other words, your choices will account for the effects of: a. marginal benefits and marginal costs of each good considered b. attainable and unattainable combinations of the goods under consideration c. the available supply of each good considered d. scarce resources in the production of each good consideration

a. marginal benefits and marginal costs of each good considered

Jill is unemployed and decides to spend the day at the spa. Jill's opportunity cost of spending a day at the spa is equal to: a. the daily spa rate, any other monetary expenses, and the value of the best alternative activity in which Jill could be engaged b. her wages had she been working c. zero because she's unemployed d. the daily spa rate and all other monetary expenses associated with her day at the spa such as lunch, drinks, tips, and transportation

a. the daily spa rate, any other monetary expenses, and the value of the best alternative activity in which Jill could be engaged

A nation's production possibilities curve (PPC) can shift outward: (check all that apply) a. with an increase in the quality and quantity of resources. b. through the use of improved production techniques. c. as a result of specialization and trade. d. with a decrease in the employment rate.

a. with an increase in the quality and quantity of resources. b. through the use of improved production techniques. c. as a result of specialization and trade.

Which of the following are issues most explored in microeconomics? (check all that apply) a. Unemployment and inflation rates b. A firm's decision to hire more workers. c. Measuring the total revenues of a firm or household d. The level of public debt e. Measuring the price of specific goods f. The expenditures of a government entity

b. A firm's decision to hire more workers. c. Measuring the total revenues of a firm or household e. Measuring the price of specific goods f. The expenditures of a government entity

Which of the following combinations are attainable given a consumer's budget line? a. Combinations that fall beyond the budget line b. Combinations on the midpoint of the budget line c. A combination involving the entire consumption of one good and zero consumption of the other good d. Combinations that fall on the budget line e. Combinations that fall inside the budget line

b. Combinations on the midpoint of the budget line c. A combination involving the entire consumption of one good and zero consumption of the other good d. Combinations that fall on the budget line e. Combinations that fall inside the budget line

What does each point on the production possibilities curve represent? (check all that apply) a. Inefficiency in production b. Efficiency in production c. The maximum output of two products d. The maximum output of many products

b. Efficiency in production c. The maximum output of the two products

Which of the following define ceteris paribus? (check all that apply) a. "Additional" factors, other than those under consideration, are given equal consideration. b. Other-things-equal assumption c. "Additional" factors, other than those under consideration, play a significant role in analysis. d. Factors other than those being considered in a particular analysis do not change.

b. Other-things-equal assumption d. Factors other than those being considered in a particular analysis do not change.

The following figure illustrates which of the following? (check all that apply) a. That the resources used to produce industrial robots and pizzas are perfectly flexible and interchangeable. b. That as one moves to the right and produces more pizzas, the number of robots that must be given up rises. c. That as one moves to the right and produces more pizzas, the number of robots that must be given up remains constant. d. That the resources used to produce industrial robots and pizzas are not perfectly flexible and interchangeable.

b. That as one moves to the right and produces more pizzas, the number of robots that must be given up rises. d. That the resources used to produce industrial robots and pizzas are not perfectly flexible and interchangeable.

Sara is an Economics major. She has a total of 16 hours to study for both exams. She speculates that her score on either test will improve by one whole grade for every two hours she spends studying either discipline. After considering her options, she chooses to study ten hours for her economics exam and six hours for her chemistry exam. The fact that Sara would like to study an equal amount for both exams, but cannot, reveals which of the following? a. Sara is probably pursuing a double major in chemistry and economics which explains why she would want to study an equal amount for both. b. The fact that scarcity restricts options and demands choices. c. The demand for choices in the face of unlimited resources is limited d. Sara lacks the human capital, and economic resource, required to study and succeed in economics. e. Sara lacks both human capital and entrepreneurial ability, both economic resources, required to succeed in chemistry.

b. The fact that scarcity restricts options and demands choices.

Which of the following are economic themes considered in macroeconomics? a. A firm's output b. The level of prices in the economy c. The unemployment rate d. A firm's income or total revenues e. National income

b. The level of prices in the economy c. The unemployment rate e. National income

Which of the following results from having scarce economic resources? a. The production of unlimited goods and services b. The production of limited goods and services c. Deflation d. Poverty and unequal distribution of wealth

b. The production of limited goods and services

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. an economic choice b. an opportunity cost c. an accounting cost d. a fixed cost e. a variable cost

b. an opportunity cost

Normative economics is: a. based on facts b. based on value judgments c. based on the use of the scientific method d. applicable only to macroeconomics

b. based on value judgments

A rightward shift of the production possibilities frontier of an economy represents: (check all that apply) a. an increase in the average price level in the economy. b. economic growth. c. an increase in the quantity of resources. d. an increase in the overall demand for goods and services in the economy.

b. economic growth. c. an increase in the quantity of resources.

A statement about economic behavior or the economy that enables prediction of the probable effects of certain actions is known as a(n): (check all that apply) a. economic hypothesis b. economic law c. normative economic statement d. economic principle

b. economic law d. economic principle

When incomes fail and the qualities of steak purchased change, economists make the ceteris paribus assumption because: (check all that apply) a. the assumption is important in distinguishing between macroeconomics and microeconomics. b. economists would otherwise be confused by the effects of changes of other variables on the quantity of steak purchased. c. income is the most important factor that influences the quantity of steak purchased. d. economists are able to account for all of the variables that impact the quantity of steak purchased. e. the assumption helps isolate the effects of a change in income on the quantity of steak purchased.

b. economists would otherwise be confused by the effects of changes of other variables on the quantity of steak purchased. e. the assumption helps isolate the effects of a change in income on the quantity of steak purchased.

The net result of increased quantities of the factors of production should be: (check all that apply) a. economic stagnation b. expanded potential output c. economic growth d. inflation e. equal production amounts of both consumer goods and capital goods

b. expanded potential output c. economic growth

Specializing and participating in international trade allows an economy to: (check all that apply) a. diver high-skilled resources toward low-valued services. b. increase the quantities of capital and consumer goods available to society. c. circumvent the output limits imposed by its own production possibilities curve. d. get more of the desired good by sacrificing greater amounts of some other good.

b. increase the quantities of capital and consumer goods available to society. c. circumvent the output limits imposed by its own production possibilities curve.

Advances in production technology enable society to produce a. less goods with more resources b. more goods with current or less resources. c. the same amount of goods utilizing more resources. d. less goods with less resources.

b. more goods with current or less resources.

Trade-offs arising from limited resources give rise to: a. rational self-interest b. opportunity costs c. unlimited wants d. scarce resources

b. opportunity costs

Unemployment in the economy is represented by: a. a rightward shift of the production possibilities curve b. points inside the production possibilities curve c. a change to a new point on the PPC d. a movement outside the PPC

b. points inside the production possibilities curve

In developing economic theories, principles, or models, economists: a. ignore important variables. b. remove clutter and simplify. c. include all possible factors. d. consider every possible outcome.

b. remove clutter and simplify.

The law of increasing opportunity costs states that as production of a particular good ____________, the opportunity cost of producing an additional unit ______________. a. falls; rises b. rises; rises c. falls; remains constant d. rises; falls

b. rises; rises

An aggregate is a collection of ___________. a. general economics units treated as many units b. specific economic units treated as if they were one unit c. specific economic units treated as if they were many units d. general economic units treated as if they were one unit

b. specific economic units treated as if they were one unit

The concept or term that refers to the notion that all variables except those under immediate consideration are held constant for a particular analysis is known as ____________. (check all that apply) a. the generalizations assumption b. the other-things-equal assumption c. laissez faire d. ceteris paribus e. the scientific method

b. the other-things-equal assumption d. ceteris paribus

A consumer's ________________ line or constraint shows various combinations of two products that can be purchased with a specific amount of income.

budget

You decide to skip going to a movie with friends and stay home and study. How did you reach your decision? a. By determining that you were not interested in the movie b. By evaluating that the marginal cost of studying exceeded the marginal benefit c. By determining that the marginal benefit of studying was greater than the marginal cost d. By realizing that there was a very high opportunity cost associated with studying

c. By determining that the marginal benefit of studying was greater than the marginal cost

Suppose an economy produces only two goods, 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? a. That its present choice in production has no effect on future prospects for economic growth. b. That its future choice in production may result in higher present prospects for economic growth. c. That its present choice in production may result in higher future prospects for economic growth. d. That its present choice in production may result in lower future prospects for economic growth.

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

Consumers must make choices about what to buy and what to forgo to fulfill wants because a. consumers' income are unlimited. b. consumers' wants are limited. c. consumers' incomes are limited.

c. consumers' incomes are limited.

Even at higher levels of __________, people will still face spending trade-offs, choices, and opportunity costs. a. savings b. supply c. income d. demand

c. income

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. a. limited; finite b. unlimited; insatiable c. limited; insatiable d. scarce; satiable

c. limited; insatiable

A production possibilities curve (PPC) illustrates the attainable combination: a. of two goods that can be produced given an unlimited amount of resources b. of two goods that can be produced given a limited amount of income c. of two goods that can be produced given a specific set of resources d. of many goods that can be produced given an unlimited amount of resources

c. of two goods that can be produced given a specific set of resources

Points lying _____________ the production possibilities curve represent greater, but unachievable levels of output with current inputs, than that at any point on the curve. a. inside b. along c. outside d. the midpoint of e. at the axis of

c. outside

A ______________ lists the different combinations of two products that can be produced with a specific set of resources, assuming full employment. a. production function b. consumption function c. production possibilities table d. budget table

c. production possibilities table

Because individuals weigh costs and benefits, their economic decisions are _______________. a. random b. insatiable c. rational d. greedy

c. rational

When an economy produces a good where the marginal benefit equals the marginal cost it is implied that a. society's well being would increase by decreasing the output of the good. b. the unemployment rate is at its minimum. c. resources are allocated efficiently. d. society would be better off by increasing the output of the good.

c. resources are allocated efficiently.

Land and mineral resources, transportation and communication facilities, factories and farm buildings, equipment, tools, and machinery are all examples of _____________. a. the economizing problem b. insatiable wantss d. unlimited economic resources e. economic growth

c. scarce economic resources

The concept that "there is no free lunch" reflects the notion that: a. the benefit of certain "free" goods only accrues to society. b. unlimited resources are used to produce so-called "free goods" that are given up in order to produce the aforesaid "free" goods. c. scarce resources are used to produce so-called "free goods" that have alternative uses that are given up. d. even if your friend pays for your lunch, you'll have to repay the favor at a later time.

c. scarce resources are used to produce so-called "free goods" that have alternative uses that are given up.

Consider the relationship between the price of gas and the quantity of gas consumed by drivers. If we are to consider the price of gas as the only factor affecting the quantity of gas consumed, while holding other factors such as drivers' incomes and tastes and preferences irrelevant, then we are invoking: (check all that apply) a. economic generalizations. b. the law of supply. c. the other-things-equal assumption. d. ceteris paribus. e. marginal analysis.

c. the other-things-equal assumption. d. ceteris paribus.

Positive economics is concerned with ________________, whereas normative economics deals with _________________. a. value judgments; factual statements b. opinions; facts c. what is; what should be d. what should be; what is

c. what is; what should be

For economists, ____________ goods include all manufactured aids used in producing consumer goods and services.

capital

Which of the following best exemplifies the relationship between a capital good and a consumer good or service? a. A smartphone and an earplug b. A brand new Dell computer and printer c. A Caterpillar earth-moving front loader and its operator d. A commercial baking oven and loaves of bread

d. A commercial baking oven and loaves of bread

Which of the following illustrates that at any point in time, a fully employed economy must sacrifice some amount of one good to obtain more of another good? a. A budget line b. Macroeconomics c. Marginal analysis d. A production possibilities table e. A budget constraint

d. A production possibilities table

Which of the following combinations are unattainable given a consumer's budget line? a. Combinations that fall inside the budget line b. Combinations on the midpoint of the budget line c. Combinations that fall on the budget line d. Combinations that fall beyond the budget line e. A combination that intersects either of the axes

d. Combinations that fall beyond the budget line

Which of the following can be stated as potentially true about any economy? a. Its future location on its production possibilities frontier has no bearing on its current decisions. b. Increased supplies of the factors of production will only affect its current location on its production possibilities frontier. c. Increased supplies of the factors of production will cause its future location to expand inward. d. Its current choice of positions on its production possibilities frontier helps determine its future location.

d. Its current choice of positions on its production possibilities frontier helps determine its future location.

Combinations of goods that are beyond the production possibilities curve: (check all that apply) a. are inefficiently produced. b. are efficiently produced. c. are attainable. d. are currently unattainable. e. require economic growth. f. would require resources that are not currently available.

d. are currently unattainable. e. require economic growth. f. would require resources that are not currently available.

Combinations of goods lying outside the budget line, not the PPF: a. suggest that the consumer gains less utility than any point inside the budget line b. indicate that the consumer is not spending all his income c. are attainable if the country engages in specialization and trade d. are unattainable, given a consumer's income

d. are unattainable, given a consumer's income

Economic principles are generalizations relating to ___________ in economic behavior or to the economy itself. a. positive tendencies b. extreme tendencies c. inverse tendencies d. average tendencies

d. average tendencies

The straight-line budget constraint indicated ____________ opportunity cost? a. decreasing b. average c. increasing d. constant

d. constant

From an economic standpoint, _______________ includes all natural resources used in the production process. a. labor b. supply c. capital d. land

d. land

For conducting a marginal analysis, individuals compare ____________ a. marginal utility and marginal productivity. b. marginal interest and marginal price. c. marginal wage and marginal yield. d. marginal benefit and marginal cost.

d. marginal benefit and marginal cost.

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

d. money produces nothing

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

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

Utility is defined as: a. the utilization of economic resources by both consumers and producers when engaging in consumption or production, respectively. b. the utilization of economic resources by producers when engaging in production. c. the utilization of economic resources by consumers when engaging in consumption. d. the satisfaction or pleasure obtained by consumers from consuming a good or service.

d. the satisfaction or pleasure obtained by consumers from consuming a good or service.

In the figure, obtaining more books by giving up some DVDs is called a ___________; whereas losing two books in order to gain 1 DVD is referred to as ________ cost. a. trade-off; a production b. opportunity; trade-off c. budget; a production d. trade-off; an opportunity

d. trade-off; an opportunity

An increase in _________ will shift the budget line to the right. a. supply b. capital c. resources d. demand e. income

e. income

The _____________ problem refers to the need to make choices because economic wants exceed economic means.

economizing

In the following figure, the opportunity cost (OC) of producing at C, rather than at B, is ________, whereas the opportunity cost of producing at D, rather than at C, is ___________. a. 7 thousand robots; 4 thousand robots b. 9 thousand robots; 7 thousand robots c. 2 thousand robots; 2 thousand robots d. 3 thousand robots; 3 thousand robots e. 3 thousand robots; 2 thousand robots f. 2 thousand robots; 3 thousand robots

f. 2 thousand robots; 3 thousand robots

To economists, the term that means "extra", "changes in" is ____________.

marginal

Arable land, water, machinery, and a professional baseball player are all considered scarce economic _______________ used in the production of goods and services.

resources

Like the physical and life sciences, as well as other social sciences, economics relies on the ___________ method.

scientific

The function of an entrepreneur is: (check all that apply) a. to maximize the welfare of society. b. to avoid risks and prevent the commercialization of new products and ideas. c. to make strategic business decisions. d. to combine the resources of land, labor, and capital to produce a good or service.

c. to make strategic business decisions. d. to combine the resources of land, labor, and capital to produce a good or service.

As more and more of a particular good is produced, which of the following rises? a. Opportunity costs b. Unemployment c. Marginal revenue d. Profits e. Employment

a. Opportunity costs

When individuals make decisions with some desired outcome in mind, they are engaging in: a. purposeful behavior b. economically efficient behavior c. chaotic behavior d. random behavior

a. purposeful behavior

Points lying ___________ the production possibilities curve are attainable, reflecting less total output than can be produced. a. on b. inside c. beyond d. along

b. inside

______________ goods satisfy wants directly, whereas ___________ goods do so indirectly. a. Capital; consumer b. Consumer; capital c. Future; capital d. Demand; supply e. Present; future

b. Consumer; capital

_________________ economics focuses on facts and cause-and-effect relationships.

Positive

Normative, value-based policy questions or statements give rise to ________________. a. controversy or disagreement among economists b. efficient markets c. inefficient markets d. agreement and collaboration among economists

a. controversy or disagreement among economists

When comparing the additional or incremental costs versus additional or incremental benefits of a decision, one is engaging in: a. supply and demand analysis b. marginal analysis c. production possibilities analysis

b. marginal analysis

T&F: Positive economics encourages value judgements.

False

Economic growth is achieved through

- increased supplies of the factors of production - advances in technology

An entrepreneur ___________

- innovates - makes strategic business decisions that set the course of an enterprise - takes the risk of earning profits or suffering losses from owning an enterprise

The factors of production include:

- land - labor - capital - entrepreneurship

The factors of production include _____________

- land - labor - capital - entrepreneurship

an entrepreneur ___.

- makes strategic business decisions that set the course of an enterprise - takes the risk of earning profits or suffering losses from owning an enterprise - innovates

which of the following are issues most explored in microeconomics?

-Measuring the price of specific goods -The expenditures of a government entity -A firms decision to hire more workers -Measuring total revenues of a firm or household

Public good

A good or service whose consumption by one person does not exclude consumption by others.

Private Good

A good or service whose consumption by one person excludes consumption by other.

Private good

A good or service whose consumption by one person excludes consumption by others.

Entrepreneurship

A person who uses resources in innovative ways.

Which of the following illustrates that at any point in time, a fully employed economy must sacrifice some amount of one good to obtain more of another good?

A production possibilities table

Labor

A steel worker

Market failure means that the economy is definitely producing:

A suboptimal mix of output.

Points lying _______ the PPC are attainable, but reflects inefficient and incomplete use of available resources

inside

A manufacturing firm builds a new warehouse to expand its inventory capacity. Economists refer to this activity as ______.

investment

In economics, the term ______ describes spending that pays for the production and accumulation of capital goods.

investment

In economics, the term _______ describes spending that pays for the production and accumulation of capital goods

investment

In economics, the term __________ describes spending that pays for the production and accumulation of capital goods.

investment

The term _____ describes spending that pays for the production and accumulation of capital goods

investment

In addition to entrepreneurship, the factor of production (resource) defined as ___________ consists of the physical actions and mental activities that people contribute to the production of goods and services.

labor

In addition to entrepreneurship, the factor of production defined as __ consists of the physical actions and mental activities that people contribute to the production of goods and services.

labor

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

labor

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

labor

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

labor

What consists of physical and mental activities that people contribute to the production of goods and services?

labor

Sources of Market Failure

• Public goods • Externalities • Market Power • Equities

In 2009 per capita GDP in the United States was approximately?

$49,000

Microeconomics

- A US software firm laid off 15 workers last month and transferred the work to India. - Recently, Smithville Bank lowered its interest rate on business loans by 2 percentage points - AN unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise.

To produce at a point lying _______ the production possibilities curve would require economic growth

Outside

T or F: The economy is producing on the production possibilities curve when an economy is producing efficiently

True

T&F: A trade-off occurs when some quantity of production or consumption of a good or service is given up in order to produce or consume another good or service.

True

Price Ceiling

Upper limit imposed on the price of a good.

_____ increases the total output society derives from ______ resources

specialization; scarce

Free Rider

An individual who reaps direct benefits from someone else's purchase (consumption) of a public good.

For the United States investment accounts for approximately ____ percent of GDP

17

Natural Monopoly

An industry in which one firm can achieve economies of scale over the entire range of market supply.

Which of the following is not considered to be a source of market power for a firm?

Antitrust laws.

Normative economics is:

Based on value judgments

GDP is defined as?

Gross Domestic Product

Economics assumes that human behavior reflects "____ self-interest."

Rational

T or F: Factors of production are scarce in every society

True

The essential feature of the market mechanism is the ___ signal.

price

intellectual property is an extension of property rights through:

-copyrights -trademarks -patents

A _____ failure is an imperfection in the market mechanism that prevents optimal outcomes.

Market

If external benefits exist:

Market demand will understate social demand.

Any imperfection in the market mechanism that prevents optimal outcomes is known as

Market failure.

Government

Maximize available resources to serve public needs

The straight-line budget constraint indicates ______ opportunity cost.

constant

which of the following best describe the virtue of efficiency?

- the market encourages the development and adoption of new and more efficient production techniques -the market system promotes the efficient use of resources by guiding them into the production of the goods and services most wanted by society

Determinants of Market Supply

- Technology - Factor cost - Other goods - Taxes and subsidies - Expectations - Number of sellers

the scientific method, on which economics rely, consists of several elements, including:

- accepting, rejecting, and adjusting a hypothesis -continuing to test the hypothesis against facts -observing real-world behavior and outcomes and formulation a hypothesis based on said observations

A nation's production possibilities curve (PPC) can shift outward:

- as a result of specialization and trade -with an increase in the quality and quantity of resources -through the use of improved production techniques

In which of the following ways do capital goods differ from consumer goods?

- consumer goods satisfy wants directly - capital goods satisfy consumer wants indirectly through the production of consumer goods

U.S GDP for 2009 was ____

15 trillion

consider the relationship between the price of gas and the quantity of gas consumed by drivers. If we are to consider the price of gas as the only factor affecting the quantity of gas consumed, while holding other factors such as drivers' incomes and tastes and preferences irrelevant, then we are invoking:

- ceteris paribus -the other-things-equal assumption

The importance of the production possibilities model is that it shows the different combinations of goods and services that society can produce ___.

- efficiently - with a given amount of resources - in a fully employed economy - inefficiently

Combinations of output that fall inside the production possibilities curve of an economy represent:

- goods that are attainable - the inefficient use of resources

which of the following describe the virtues of incentives?

- greater work skills and effort mean greater production and higher incomes leading to higher standards of living - hard work, skill acquisition, and innovation -assumption of risk by entrepreneurs to innovate and improve the general standard of living

the importance of the production possibilities curve is that it shows the different combinations of goods and services that a society can produce:

- in a fully employed economy -efficiently -given a fixed state of technology -given a fixed amount of resources

which of the following describes a technological advancement?

- new and improved methods that reduce production and/or distribution costs -the ability to produce better products and processes to replace inferior ones -the ability of a firm or entrepreneur to gain revenue and economic profit at the expense of rivals by introducing a popular new product

Ceteris paribus

- other things equal - the idea that factors other than those being considered in a particular analysis do not change

which of the following are true of the partnership form of business organization?

- partners share profits and losses -partners pool financial resources and business skills

The "economy is us" means that it represents our collective:

- production activities - consumption activities

The combinations of goods that lie on the production possibilities curve of a country:

- represent an efficient utilization of resources -utilize all of an economy's available resources -are attainable

Combinations of goods that fall outside the production possibilities curve of an economy ____.

- require economic growth - are unattainable in the short run - would require resources that are not currently available

Macroeconomics

- the Consumer Price Index (CPI) rose by 3% in 2007 - the real GDP for the US grew by 2.2% in 2007 -the trade deficit between the US and China grew between 2000 and 2009

the least-cost production technique depends on

- the available technology -the cost of the needed resources

Which of the following statements or questions exemplify normative economics

- the government SHOULD increase the minimum wage -the government OUGHT to bail out distressed banks - what SHOULD the Federal minimum wage be?

What does each point on the production possibilities curve represent?

- the maximum output of two products -efficiency in production

which of the following factors are the determinants of a person's income?

- the prices commanded by the skills of the person in the resource market -the quantities of the property and human resources supplied

which of the following describe the concept of laissez-faire?

-a market system in which firms are free to pursue maximum profits -a market system in which the role of government is limited to protecting private property

Consumers derive personal satisfaction from goods and services by

-acting in a self-interested manner -allocating their time and energy to maximize satisfaction

which of the following best describe how goods and services can be produced?

-by utilizing the right mix of labor and capital -by locating production facilities optimally to hold down production and transportation expenses

Which of the following combinations are attainable given a consumer's budget line?

-combination involving the entire consumption of one good and zero consumption of the other good -combinations that fall ON the budget line -combinations that fall INSIDE the budget line -combinations on the MIDPOINT of the budget line

the command economies of the former soviet union and of eastern europe failed due to:

-coordination problems -incentive problems

The net result of increased quantities of the factors of production should be:

-economic growth -expanded potential output

A statement about economic behavior or the economy that enables prediction of the probable effects of certain actions is known as a(n):

-economic principle -economic law

the most important consequence of property rights is that they ________.

-encourage cooperation by ensuring that only mutually agreeable economic transactions take place

competition among economic units:

-implies that producers can enter or leave an industry -diffuses economic power within the businesses and households that makeup the economy

identify the 3 virtues of the market system

-incentives -efficiency -freedom

Economic growth is the result of:

-increases in supplies of resources -improvements in resource quality -technological advances

Which of the following describes the concept of rational self-interest?

-individuals look for and pursue opportunities to increase their utility -individuals allocate their resources to maximize their satisfaction -individuals weigh the costs and benefits of their decisions

Combination of goods that fall inside the production possibilities curve represent:

-inefficient use of resources -less total output in an economy -goods that are attainable

Property rights also extend to:

-intellectual property

Factors of production include _____________.

-land -labor -capital -entrepreneurship

Combinations of output that fall inside the production possibilities curve represent:

-less total output in an economy -inefficient use of resources -goods that are attainable

describe the role of a central planning board appointed by a command system government

-makes all decisions concerning the use of resources -makes decisions on the composition and distribution of output -organizes production

which of the following are characteristics of the market system?

-markets and prices -freedom of choice -self-interest -private property -freedom of enterprise -competition

An individuals' income rise, they will still be confronted with which of the following?

-opportunity cost -trade-offs -choices

which of the following describe the role of government in the united states' form of capitalism?

-provides the rules for economic activity -modifies the distribution of income -provides certain goods and services that would otherwise be under-produced or not produced at all -promotes economic stability and growth

The combinations of goods that lie on the production possibilities curve of a country:

-represent an efficient utilization of resources -utilize all of an economy's available resources -are attainable

which of the following are markets in a simple circular flow model?

-resource market -product market

Society's Economizing Problem involves:

-scarce resources -opportunity cost -making choices in the face of scarcity

human specialization or division of labor contributes to a society's output in which of the following ways?

-specialization makes use of DIFFERENCES in ability -specialization saves TIME -specialization fosters learning by DOING

When incomes fall and the quantities of steak purchased change, economist make the ceteris paribus assumption because:

-the assumption helps isolate the effects of a change in income on the quantity of steak purchased -economist would otherwise be confused by the effects of changes of other variables on the quantity of steak purchased

which of the following are economic themes considered in macroeconomics?

-the level of prices in the economy -the unemployment rate -national income

The concept or term that refers to the notion that all variables except those under immediate consideration are held constant for a particular analysis is known as:

-the other-things-equal assumption -ceteris paribus

private individuals and businesses are able to utilize property as they wish as a result of:

-the right of private property -the ability to negotiate legally binding contracts

which of the following helps sustain the institution of private property?

-the right of property owners to designate who will receive their property when they die -the freedom of enterprise

which of the following statements describe who will get the goods and services produced in a market economy?

-those who have sufficient income and want to spend money on a particular good -those who are willing and able to pay

which of the following are examples of capital goods?

-tools -machinery -large-scale factories

identify the 5 fundamental questions that all economies, whether market or command, must address

-what goods and services will be produced? -how will the goods and services be produced? -who will get the goods and services? -how will the system accommodate change? -how will the system promote progress?

Which of the following statements or questions exemplify positive economics?

-when the government increases the minimum wage, the unemployment rate will rise -the unemployment rate in Mexico is higher than in the United States -as the flight ticket prices fall, airlines experience a sharp increase in the revenue

What sector contributes to the largest amount to the US GDP?

...

As such, the PPC illustrates two essential principles: 1) ___ meaning that there's a limit to the amount of output we can produce in a given time period with available resources and technology 2) __ is the idea that we can obtain additional quantities of any particular good only by reducing the potential production of another good

1) scarce resources 2) opportunity costs

which of the following does competition imply:

1. It provides the economy with the flexibility needed to remain efficient over time. 2. No insurmountable barriers prevent an industry from expanding or contracting. 3. It enables the economy to adjust to changes in consumer tastes, technology, and resource availability.

A nations production possibilities curve can shift outward?

1. as a result of specialization and trade 2. with an increase of the quantity and quality of resources 3. through the use of improved production techniques

Natural resources, labor, human capital, physical capital and entrepreneurship are all scarce economic resources privately or collectively owned by members of society. Where these scarce resources are used to produce goods or services, there is:

A cost borne by society in utilizing these resources to produce any good or service. No free lunch.

Which of the following describes a budget line?

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

Demand Schedule

A table showing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period, ceteris paribus.

The situation where one thing has to be given up in order to have some other item is called a:

A trade-off

Combinations of goods that fall on the production possibilities curve utilize ____ of an economy's resources:

All

What does every point on a budget line graph represent?

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

Land

All natural resources not just the ground

Which of the following best, clarifies the "other-things-equal" assumption?

All variables except those under immediate consideration are held constant for a particular analysis

Which of the following best clarifies the "other-things-equal" assumption?

All variables except those under immediate consideration are held constant for a particular analysis.

Consumers derive personal satisfaction from goods and services by

Allocating their time, energy, money and other resources so as to maximize their satisfaction from consuming these goods Acting in their own self interest

Points_______ the production possibilities curve are attainable so long as an economy uses all of its available resources.

Along

Who takes the risk of earning profits or suffering losses from owning an enterprise? Who makes strategic business decisions that set the course of an enterprise? Who innovates?

An entrepreneur

Air pollution best illustrates

An externality.

Market failure occurs when:

An imperfection in the market mechanism prevents an optimal outcome.

Market Failure

An imperfection in the market mechanism that prevents optimal outcomes.

Market failure

An imperfection in the market mechanism that prevents optimal outcomes.

Free rider

An individual who reaps direct benefits from someone else's purchase (consumption) of a public good.

Combinations of goods that fall inside of the production possibilities curve...

Are inefficiently produced Are not utilizing all of an economy's resources Are attainable

Externalities

Are the costs or benefits of market activities that "spill over" onto third parties.

Efficiency

Are we getting as much service as we could from the resources we allocate to government?

A nations production possibilities curve (frontier) can shift outward:

As a result of specialization and trade With an increase in the quality and quantity of resources Through the use of improved production techniques

Why is it in our self-interest to economize or pick and choose goods and services that maximize our satisfaction?

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

Individuals' economic decisions are purposeful or rational because they weigh ____ and ____.

Benefits Costs

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 maximize your satisfaction. In other words, your choices will account for the effects of marginal ____ and marginal ____ of each goods considered.

Benefits Costs

Which of the following combinations are unattainable given a consumer's budget line? Combinations that fall ____ the budget line.

Beyond

The role of the entrepreneur in an economy is to

Bring the factors of production together and assume the risk of production.

A consumer's ____ line or constraint shows various combinations of two products that can be purchased with a specific amount of income.

Budget

the product market is a place where _______

Businesses sell goods and services and households buy goods and services

Consumers

Buy the most desirable goods and services that their limited budgets permit

In which of the following ways do capital goods differ from consumer goods?

Capital goods satisfy consumer wants indirectly by facilitating the production of consumer goods. Consumer goods satisfy wants directly.

Consider the relationship between the price of gas and the quantity of gas consumed by drivers. If we are to consider the price of gas as the only factor affecting the quantity of gas consumed, while holding other factors such as drivers' incomes and tastes and preferences irrelevant, then we are invoking ____ ____

Ceteris paribus

The concept or term that refers to the notion that all variables except those under immediate consideration are held constant for a particular analysis is known as:

Ceteris paribus

Specializing and participating in international trade allows an economy to do which of the following?

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

Which of the following combinations are attainable given a consumer's budget line?

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

The straight-line budget constraint indicates ____ opportunity cost.

Constant

______ goods satisfy wants directly, whereas ______ goods do so indirectly.

Consumer; capital

Economic principles are generalizations expressed as the tendencies of typical or average ____, workers, or business ____:

Consumers Firms

Jill is unemployed and decides to spend the day at the spa. Jill's opportunity cost of spending a day at the spa is equal to the ____ spa rate, any other ____ expenses, and the value of the best ____ activity in which Jill could be engaged.

Daily Monetary Alternative

Capital goods differ from consumer goods in that consumer goods satisfy wants ____

Directly

Combinations of goods that are beyond the production possibilities curve require ____ ____.

Economic growth

The net result of increased quantities of the factors of production is ____ ____

Economic growth

Which of the following are all possible because of private property rights in a market system?

Economic growth Exchange Maintenance of property Innovation Investment

A statement about economic behavior or the economy that enables prediction of the probable effects of certain actions is known as an:

Economic principle

What does each point on a production possibility represent?

Efficiency in production The maximum potential output of two or more products

Combinations of goods that fall on the production possibilities curve are ____ produced.

Efficiently

The factors of production include?

Entrepreneurship, labor, land, capital

An _______ outcome is one each individual affected is treated fairly

Equitable

The Consumer Price Index (CPI) rose by 3 percent in 2007

Example of Macroeconomics

The real GDP for the United States grew by 2.2 percent in 2007

Example of Macroeconomics

The trade deficit between the U.S. and China grew between 2000 and 2009

Example of Macroeconomics

A U.S. software film laid off 15 workers last month and transferred the work to India

Example of Microeconomics

An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise.

Example of Microeconomics

Taken together, the four general categories of economic resources (land, labor, capital, and entrepreneurial ability) are referred to as which of the following?

Factors of production

Government _________ occurs when government intervention fails to improve economic outcomes.

Failure

T or F: Only those resources that are privately owned are counted as factors of production.

False

T&F: The three main decisions that must be addressed by an economic system include what goods are to be produced, who will produce them, and where they will be produced.

False

T/F: All, but the super wealthy, have a finite or limited amount of income

False

T/F: Constant opportunity costs is best exemplified through a curved production possibilites frontier

False

T/F: the scientific method is unique to economics alone

False

The 3 main decisions that need to be addressed by an economic system include what goods are to be produced, who will produce them, and where will they be produced

False

True or False: The three main decisions that must be addressed by an economic system include which goods to demand, how to motivate employees, and how to distribute goods in a market.

False

True or False: Economics, as a social science, is concerned with how to make money

False

True or False: The 3 main decisions that must be addressed by an economic system include which goods to demand, how to motivate employees, and how to distribute goods in a market.

False

True or false: Economics, as a social science, is concerned with how to make money?

False

True or false: Economists use the terms "capital" and "money" interchangeably.

False

True or false: The three main decisions that must be addressed by an economic system include what goods are to be produced, who will produce them, and where they will be produced.

False

True or False: The 3 main decisions that must be addressed by an economic system include what goods are to be produced, who will produce them, and where they will be produced

False- an economic system has to determine what goods are produced, how they are produced, and for whom the output is produced

Capital

Final goods produced for use in the production of other goods, e.g., equipment, structures.

The economic question of "_______ to produce" is about decisions related to who is going to consume the goods and services produced.

For Whom

The economic question of "_______ to produce" is about decisions related to who is going to consume the goods and services produced

For whom

Select all choices from the following that would be considered land to an economist

Forests Oil and mineral deposits Arable Land Sunlight Water

Natural resources, labor, human capital, physical capital, and entrepreneurship are all scarce economic resources privately or collectively owned by members of society. Where these scarce resources are used to produce goods or services, there is no ____ ____.

Free lunch

Private property helps to facilitate exchange in which type of economic system?

Free market system

What refers to the total value of all final goods and services produced in a country during a given time period, its a summary measure of a nations output

GDP

The importance of the production possibilities model is to show the different combinations of goods and services that society can produce:

Given a fixed amount of resources Inefficiently Efficiently In a fully employed economy

Complementary Goods

Goods frequently consumed in combination; when the price of good X rises, the demand for good Y falls, ceteris paribus.

What do combinations of output that fall inside the production possibilities curve represent?

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

Substitute Goods

Goods that substitute for each other; when the price of good X rises, the demand for good Y increases, ceteris paribus.

When a country engages in international specialization, it focuses on producing which of the following?

Goods with the lowest opportunity costs

Government Failure

Government intervention that fails to improve economic outcomes.

The economizing problem refers to the need to make choices because economic wants are ____ than economic means.

Greater

The ability to produce more of both consumer goods is the net result of economic ____ and ____ supplied of the factors of production.

Growth Increased

The economic question of "______ to produce" is about decisions related to the mix of factor inputs (land, labor, capital...) used to produce goods and services.

How

Economic growth is the result of ____ in resource quality.

Improvements

An increase in ____ will shift the budget line to the right.

Income

Payments to individuals for which no current goods or services are exchanged are called?

Income transfer

An ____ in income shifts a consumer's budget line to the right.

Increase

A private good

Is consumed by one person and excludes consumption by others.

Which of the following can be stated as potentially true about any economy?

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

When comparing GDP per capita which links ranks countries correctly from largest to smallest ?

Japan Mexico Haiti

In addition to entrepreneurship, the factor of production (resources) defined as ___________ consists of the physical actions and mental activities that people contribute to the production of goods and services.

Labor

In addition to entrepreneurship, the factor production (resource) defined as _______ consists of the physical actions and mental activities that people contribute to the production of goods and services

Labor

In addition to entrepreneurship, the resource of ____ consists of the physical actions and mental activities that people contribute to the production of goods and services.

Labor

What do economists call the physical actions and mental activities that people contribute to the production of goods and services?

Labor

Scarcity

Lack of enough resources to satisfy all desired uses of those resources.

The factors of production include:

Land, labor, capital, entrepreneurship

Market failure implies that a policy of laissez-faire:

Leads the economy to an undesirable point on the production possibilities curve.

Market failure implies that the market mechanism

Leads the economy to the wrong mix of output.

A decrease in income will shift the budget line to the ____.

Left

Combinations of output that fall inside the production possibilities curve represent:

Less total output in an economy Goods that are attainable Inefficient use of resources

Everyone, even the very wealthy, has a ____ amount of income.

Limited

Which of the following results from having scarce economic resources? The production of ____ goods and services.

Limited

____ is the discipline that examines either the economy as whole or its aggregates.

Macroeconomics

The economic perspective focuses on _________ therefore the decision maker must compare incremental benefits and costs.

Marginal analysis

Government antitrust activity led to the breakup of AT&T in the 1980s because, among other things, it felt that AT&T had too much control over the telecommunications market. What type of market failure was most likely involved?

Market power

Which of the following justifies the federal government's role in antitrust enforcement?

Market power.

Consumers derive personal satisfaction from goods and services by allocating their time, energy, money, and other resources so as to ____ their satisfaction from consuming these goods:

Maximize

Which of the following are issues most explored in microeconomics?

Measuring the price of specific goods The expenditures of a government entity A firms decision to hire more workers Measuring total revenues of a firm or household

____ is the discipline of economics concerned with individual units such as households, firms, and government.

Microeconomics

__________ is the discipline of economics concerned with individual units such as a person, household, firm or industry.

Microeconomics

Which of the following combinations are attainable given a consumer's budget line? Combinations on the ____ of the budget line, ____ on the budget line, fall ____ the budget line, and a combination that involves the entire consumption of one good and ____ consumption of the other goods.

Midpoint Fall Inside Zero

Economists do not include money as a factor of production because:

Money is a medium of exchange rather than an input to the production of goods and services

Economists do not include money as an economic resource because money produces ____:

Nothing

A production possibilities curve shows the attainable combination:

Of two goods that can be produced given a specific set of resources

Due to scarce resources, every individual, whether rich or poor, is faced with an ____ cost when choosing to produce or consume more of one good over another.

Opportunity

Society's economizing problem involves ____ cost, making choices in the face of ____, and ____ resources.

Opportunity Scarcity Scarce

The highest-valued alternative that is given up or sacrificed when choosing to produce or consume one good over another is referred to as:

Opportunity cost

As more and more of a particular good is produced, which of the following rises?

Opportunity costs

Trade-offs arising from limited incomes give rise to:

Opportunity costs

Trade-offs arising from limited resources give rise to:

Opportunity costs

Given that resources are scarce, ________ are experienced whenever choices are made.

Opportunity costs are experienced whenever choices are made.

The most desirable combination of output attainable with existing resources, technology, and social values is known as the

Optimal mix of output.

Specializing and participating in international trade allows an economy to circumvent the ____ limits imposed by its own production possibilities curve.

Output

Each point on the production possibilities curve represent some ____ ____ of two products.

Output combination

Points lying _________ the production possibilities curve are unattainable with the current availability of resources and technology

Outside

A nation's production possibilities curve can shift ____ as a result of specialization and trade:

Outward

A nation's production possibilities curve can shift ____ through the use of improved production techniques:

Outward

A nation's production possibilities curve can shift ____ with an increase in the quality and quantity of resources:

Outward

Arable land, water, machinery, and a professional baseball player are all considered scare economic ____ to production.

Resources

Income transfers

Payments to individuals for which no current goods or services are exchanged (e.g., Social Security, welfare, and unemployment benefits).

The market under produces public goods because:

People are less willing to pay for public goods than for private goods.

Income Elasticity of Demand

Percentage change in quantity demanded divided by percentage change in income.

_______ economics focuses on facts and cause and effect relationships.

Positive

____ economic analysis concerns what is, whereas ____ economic analysis embodies subjective feelings about what ought to be.

Positive Normative

A _________ economic analysis concerns what is, whereas a _________ economic analysis represent subjective statements about what ought to be

Positive, Normative

_______ economic analysis concerns what is, whereas ___________ economic analysis represent subjective statements about what ought to be.

Positive, normative

Suppose an economy produces only two goods, 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? That its ____ choice in production may result in ____ future prospects for economic growth.

Present Higher

The essential feature of the market mechanism is the ________ signal.

Price

The development of market power by a firm is considered to be a market failure because firms with market power will

Produce less and charge a higher price than what would be socially optimal.

In economics, investment describes spending that pays for the ____ and ____ of capital goods:

Production Accumulation

What does each point on the production possibilities curve represent? Efficiency in ____ and the maximum ____ of two products.

Production Output

Which of the following illustrates the attainable combination of two goods that can be produced given a specific set of resources

Production Possibilities Curve

A ____ ____ curve "implies" the attainable combination of many goods that can be produced given a specific set of resources:

Production possibilities

Which of the following illustrates the attainable combination of two goods that can be produced given a specific set of resources?

Production possibilities curve

Which of the following describe the role of government in the United States' form of capitalism?

Provides certain goods and services that would otherwise be underproduced or not produced at all Modifies the distribution of income Promotes economics stability and growth Provides the rules for economic activity

The free-rider dilemma is associated with:

Public goods

The free-rider problem arises because:

Public goods can be jointly consumed.

Because consumers behave in a rationally self-interested manner, the consumer will ____ a good or service when the ____ ____ is greater than or equal to the ____ ____:

Purchase Marginal benefit Marginal cost

When individuals make decisions with some desired outcome in mind, they are engaging in:

Purposeful behavior

In comparing marginal benefits versus marginal costs of a decision, we can assume that a decision maker is making choices ____.

Purposefully

Supply Schedule

Quantity supplied at given price

which of the following best exemplifies the importance of advanced technology and capital goods?

Rather than producing with his bare hands, a farmer can derive huge benefits from using equipment such as a tractor, plow, and storage bin.

The law of increasing opportunity costs states that as production of a particular good ____, the opportunity cost of producing an additional unit ____.

Rises Rises

Economics is a ________ science concerned with the allocation of __________ resources to meet the unlimited wants of the members of a given society

SOCIAL science concerned with the allocation of SCARCE

Economics is a science concerned with the allocation of __________ resources among competing uses

Scarce

The concept that "there is no free lunch" reflects the notion that ____ resources are used to produce so-called "free goods" that have alternative uses that are given up in order to produce said "free" goods.

Scarce

Land and mineral resources, transportation and communication facilities, factories and farm buildings, equipment, tools, and machinery are all examples of:

Scarce economic resources

As such, the production possibilities curve illustrates two essential principles: 1. __________: there's a limit to the amount of output we can produce in a given time period with available resources and technology. 2. _________: the idea that we can obtain additional quantities of any particular good only by reducing the potential production of another good.

Scarce resources; opportunity costs

________ is the notion that, in general, the quantity desired of economic goods (or services) exceeds the quantity available.

Scarcity

Like the physical and life sciences, as well as other social sciences, economics relies on the ____ method.

Scientific

Consumers derive personal satisfaction from acting in a ____ ____ manner.

Self-interested

External costs are equal to the difference between:

Social costs and private costs.

Which of the following define positive economics

Statements based on facts empirical cause and effect relationships Measurable or scientific statements about economic behavior

______ economies must forgo some of one good to gain more of another, whereas ______ economies are able to increase production of both goods.

Static; dynamic

If external benefits occur when a good is consumed, then the government should:

Subsidize the consumption or production of the good.

suppose an economy produces only two goods, consumer goods and capital goods. its current combination of production involving higher level of capital goods than consumer goods. which of the following can be inferred from this current choice on its production possibilities curve?

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

The first antitrust act to prohibit "conspiracies in restraint of trade" was:

The Sherman Act.

Demand

The ability and willingness to buy specific quantities of a good at alternative prices in a given time period, ceteris paribus.

Market power

The ability to alter the market price of a good or service.

Total Utility

The amount of satisfaction obtained from entire consumption of a product.

Entrepreneurship

The assembling of resources to produce new or improved products and technologies.

Marginal Utility

The change in total utility obtained by consuming one additional (marginal) unit of a good or service.

Private costs

The costs of an economic activity directly borne by the immediate producer or consumer (excluding externalities).

The need to make choices because economic wants exceed economic mean, most likely describes:

The economizing problem

The "economy is us" means...

The economy represents our collective consumption and production activities

Sara is an Economics major. She has a total of 16 hours to study for both exams. She speculates that her score on either test will improve by one whole grade for every two hours she spends studying either discipline. After considering her options, she chooses to study ten hours for her economics exam and six hours for her chemistry exam. The fact that Sara would like to study an equal amount for both exams, but cannot, reveals which of the following?

The fact that scarcity restricts options and demands choices

Which of the following statements or questions represent normative economics?

The government ought to ball out distressed banks Cable companies should merge because they result in more competitive pricing What should the Federal minimum wage be? The government should increase the minimum wage.

Which of the following define ceteris paribus?

The idea that factors other than those being considered in a particular analysis do not change Other-things-equal assumption

A production possibilities curve with an increasing slope is the result of which of the following?

The law of increasing opportunity costs

The distinction between public goods and private goods is based on:

The link between payment and consumption.

Law of Diminishing Marginal Utility

The marginal utility of a good declines as more of it is consumed in a given time period.

Optimal Mix of Output

The most desirable combination of output attainable with existing resources, technology, and social values.

From an economic standpoint, government intervention is justified

When the market mechanism fails to achieve the optimal mix of output.

Which of the following best exemplifies the relationship between a capital good and a consumer good or service?

a commercial baking oven and loaves of bread

Consumers must forgo certain goods and services based on a limited budget because ______.

a consumer spends his or her limited budget purchasing a combination of goods and services that maximize his or her satisfaction

Natural resources, labor, human capital, physical capital and entrepreneurship are all scarce economic resources privately or collectively owned by members of society. Where these scarce resources are used to produce goods or services..

a cost borne by society in utilizing these resources to produce any good or service, no "free lunch"

A point that lies inside the production possibilities curve reflects:

a failure to achieve full employment

the operation of ______ creates a curious unity between private interests and social interests

a market system

which of the following is characterized by the private ownership of resources and the use of markets to coordinate and direct economic activity?

a market system

which of the following illustrates that at any point in time, a fully employed economy must sacrifice some amount of one go to obtain more of another good?

a production possibilities table

In the type of capitalism practiced in the U.S. and most other countries, the government plays __________ role.

a substantial

in the type of capitalism practiced in the united states and most other countries, the government plays _________ role in the economy

a substantial

Natural resources, labor, human capital, physical capital, and entrepreneurship are all scarce economic resources privately or collectively owned by members of society. Where these scarce resources are used to produce goods or services, there is: (check all that apply) a. no "free lunch" b. a cost is borne by society in utilizing these resources to produce any goods or services c. no opportunity cost d. no cost is borne by society in utilizing these resources to produce goods or services

a. no "free lunch" b. a cost is borne by society in utilizing these resources to produce any goods or services

A budget line describes: a. the alternative combinations of two goods that a buyer can purchase with a given money income b. the alternative combinations of two goods that will yield the same level of total satisfaction to a consumer c. the quantities of a particular good that a consumer will purchase at various prices

a. the alternative combinations of two goods that a buyer can purchase with a given money income

The optimal allocation of resources is such that: a. the production of the two goods is equal. b. the marginal benefit of the good is greater than the marginal cost. c. the marginal cost of producing the good is equal to zero. d. the marginal benefit of the good equals the marginal cost.

a. the production of the two goods is equal.

In macroeconomics, a(n) ______ is a collection of specific economic units treated as if they were one unit

aggregate

In macroeconomics, an ________ is a collection of specific economic units treated as if they were one unit.

aggregate

Points __ an economy's production possibilities curve are attainable as long as the economy is producing efficiently.

along

Points ______ the production possibilities curve are produced efficiently so long as an economy uses all of its available resources

along

Points ______ the production possibilities curve represent a maximum output of two products as long as the economy is fully employed.

along

Points that are ____ the PPC are attainable so long as the economy uses all of its available resources.

along

The alternative combos of final goods and services that could be produced in a given time period with all available resources and technology is...

an economy's production possibilities

Combinations of goods that fall on the production possible curve:

are attainable utilize all of an economies resources are efficiently produced represent economic growth

combinations of goods lying outside the budget line, not the PPF:

are unattainable, given a consumer's income

Positive economics ______ value judgments, tries to establish ______ statements about economic behavior, and deals with ______ economic events.

avoids; scientific; actual

positive economics ____ value judgements, tries to establish ____ statements about economic behavior, and deals with ______ economic events

avoids; scientific; actual

A consumer's ______ line or constraint shows various combinations of two products that can be purchased with a specific amount of income. Listen to the complete question

budget

A consumer's ________ line or constraint shows various combinations of two products that can be purchased with a specific amount of income.

budget line

which of the following would be an example of the system accommodating change?

buyers want more juice and less milk. producers increase spending only on juice. profits rise in the juice industry and fall in the milk industry

Factories, storage, transportation and distribution facilities, as well as tools and machinery are all examples of ___ goods.

capital

Factories, storage, transportation, and machinery are all examples of ______ goods.

capital

For economists, ____ goods includes all manufactured aids used in producing consumer goods and services.

capital

For economists, ______ goods include all manufactured aids used in producing consumer goods and services.

capital

For economists, ________ goods are goods that are used to produce final consumer goods and services.

capital

Which of the following are general categories economists use to classify economic resources?

capital labor entrepreneurial ability land

Arable land, water machinery and professional baseball player are all considered scarce economic __________ to production.

inputs

private property rights, coupled with the freedom to negotiate binding legal ________ enables individuals and businesses to obtain, use, and dispose of property resources as they see fit.

contracts

Normative, value-based policy questions or statements give rise to ________.

controversy or disagreement among economists

the ________ problems faced by the command economies of the former soviet union, eastern europe, and china prior to market reforms became more difficult as the economies expanded and as markets became more complex

coordination

In recent years, new MP3 and digital technologies have started to replace compact disks. This is an example of:

creative destruction

Who owns most property resources in a command system?

government

Bureaucratic delays, Required use of pollution control technology that is obsolete, and Inefficient incentives are examples of...

government failure

which of the following does NOT occur in the RESOURCE market?

households purchase goods and services from firms

The economic question of "___ to produce" is about decisions related to the mix of factor inputs (land, labor, capital...) used to produce goods and services.

how

The economic question of '____ to produce' is about decisions related to the mix of factor inputs used to produce goods and services.

how

the economies of the former soviet union, eastern europe, and china prior to market reforms faced problems caused by a lack of coordination and a lack of _______

incentive

If the United States decides to convert automobile factories to tank production, as it did during World War II, but finds that some auto manufacturing facilities are not well suited to tank production, then opportunity costs will _______ with greater tank production.

increase

The law of increasing opportunity costs sates that as production of a particular good _________ the opportunity cost of producing an additional unit of the good ________.

increases; increases

Combination of goods that fall inside the PPC represent:

inefficient use of resources; goods that are attainable; less total output in an economy

What does an entrepreneur do?

innovates, makes strategic business decisions that set the course of an enterprise, takes risk of earning profits or suffering losses from owning an enterprise

The branch of economics that studies the economy as a whole or in the aggregate is known as:

macroeconomics

_____ is the discipline that examines the performance and behavior of an economy as a whole

macroeconomics

To economists, the term that means "extra", "additional", or "changes in" is _____ (one word)

marginal

Recently, you decided to super-size your fries at McDonald's. On the one hand, your decision to super-size considered the additional costs associated with the super-size, including the additional monetary, caloric and cholesterol intake, as well as the extra time you had to wait for those fries because a new batch was being prepared. On the other hand, you determined that the extra benefits from super-sizing included a few more mouthfuls of satisfaction from an increased portion of fries. The benefits clearly outweighed the costs since you chose to super-size. Which of the following does this illustrate?

marginal analysis

When comparing the additional or incremental costs versus additional or incremental benefits of a decision, one is engaging in:

marginal analysis

For conducting a marginal analysis, individuals compare _____.

marginal benefit and marginal costs

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. In other words, your choices will account for the effects of:

marginal benefit and marginal costs of each good considered

In economics, an incremental or gradual change is also known as a _________

marginal change

A _____ failure is an imperfection in the market mechanism that prevents optimal outcomes

market

A _____ failure is an imperfection in the market mechanism that prevents optimal outcomes.

market

a _____ is an institution or mechanism that brings buyers and sellers into contact.

market

in a ________ system, people act in their own self-interest

market

private individuals and firms, not the government, own most of the property resources such as land and capital in a free _______ system

market

Under the market system, ____ and ____ coordinate the decisions made by households and businesses

markets; prices

What does each point on the PPC represent?

maximum potential output of two or more products, efficiency in production

What defines positive economics?

measurable or scientific statements about economic behavior; statements based on facts empirical cause-and-effect relationships

____ is the discipline of economics concerned with individual units such as households, firms and government.

microeconomics

in a market system________ create powerful incentives for firms to innovate and entrepreneurs to pioneer new products and processes

monetary rewards

the use of ______ in market systems facilitates the exchange of goods and services that specialization requires

money

Economists do not include money as an economic resource because ______.

money produces nothing

A firm that produces the entire market supply of a certain good or service is known as _____.

monopoly

Improvements in the methods of production allows for the creation of ______.

more goods with available resources

Advances in production technology enable a society to produce

more goods with current or less resources

To economists, land includes all ___, or gifts of nature, used in the production process.

natural resources

To economists, land includes all _____, or gifts of nature, used in the production process

natural resources

which of the following best illustrates a coincidence of wants?

nebraska has excess wheat to trade and wants oranges. Florida has excess oranges and wants wheat. Therefore, an exchange occurs.

A production possibility curve (frontier) shows the attainable combination:

of two goods that can be produced given a specific set of resources

A production possibilities curve (PPC) illustrates the attainable combination ______,

of two goods that can be produced given a specific set of resources (Reason: It is true that two goods are illustrated on the graph. However, these two goods are meant to represent (imply) the combinations of the many goods that can be produced in an economy given a set of resources.)

The efficient output of an economy with a specific level of resources is reflected by the points ____ the production possibilities curve

on

Due to scarce resources, every individual, whether rich or poor, is faced with a(n) __ cost when choosing to produce or consume more of one good over another.

opportunity

Due to scarce resources, every individual, whether rich or poor, is faced with an ____ cost when choosing to produce or consume more of one good over another.

opportunity

The highest valued alternative that is given up or sacrificed when choosing to produce or consume one good over another is referred to as:

opportunity cost

The law of increasing ___ states that as production of a particular good increases, the cost of producing an additional unit rises

opportunity cost

As more and more of a particular good is produced, which of the following rises?

opportunity costs

The law of increasing _____ states that as production of a particular good increases, the cost of producing an additional unit rises

opportunity costs

Trade-offs arising from limited resources give rise to ______.

opportunity costs

Trade-offs arising from limited resources give rise to:

opportunity costs

What is ceteris paribus?

other-things-equal assumption; the idea that factors other than those being considered in a particular analysis do not change

Each point on the PPC represents some _____ of two or more products.

output combination

Each point on the production possibilities curve represents some alternative _____ of two or more products.

output combination

Points lying ____ the PPC are unattainable with the current availability of resources and technology.

outside

The various forms of intellectual property rights include ____, ______, ______.

patents, copyrights, and trademarks

business success in the command economies of the former soviet union, eastern europe, and china prior to market reforms failed because it was based on:

political savvy

entrepreneurs and owners of businesses use part of their ________ in order to accumulate more capital goods

profits

mutually agreeable economic transactions take place as a result of:

property rights

Most businesses in the United States are classified as ______.

proprietorships

In the type of economy existing in the US and most other countries the government plays ___ role

susbstantial

Because individuals weigh costs and benefits, their economic decisions are _____.

rational

When individuals take into account the costs and benefits of their economic decisions, these decisions are considered to be_________.

rational

in developing economic theories, principles, or models, economists:

remove clutter and simplify

Combination of goods that fall beyond the production possibilities curve (frontier)

require economic growth currently unattainable requires resources not currently available

Combinations of goods that are beyond the PPC ___.

require economic growth; require resources that are not available, are unattainable

Both land and labor would be bought and sold in the _________ market.

resource

When an economy produces a good where the marginal benefit equals the marginal cost it is implied that

resources are allocated efficiently

When an economy produces a good such that the marginal benefit equals the marginal cost, this indicates that ______.

resources are being allocated efficiently

The law of increasing opportunity costs is driven by?

resources that are not equally productive in the production of different goods or interchangeable

The law of increasing opportunity is driven by:

resources that are not equally productive in the production of different goods or interchangeable

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

resources, categories, factors, or inputs

in the market system, competition, freedom of choice, self-interest, and personal _____ provide the opportunity and motivation for technological advance

reward

The law of increasing opportunity costs states that as production of a particular good ___, the opportunity cost of producing an additional unit ___.

rises; rises

For a market system to maximize its potential it must develop methods for assessing and managing ________.

risk

Economics is the science concerned with the allocation of ___ resources among competing uses

scarce

The concept that "there is no free lunch" reflects the notion that:

scarce resources are used to produce so-called "free goods" that have alternative uses that are given up

competition among _____ and _______ diffuses economic power within the economic units that make up an economy

sellers; buyers

Income transfers include ?

social security (food stamps) welfare unemployment benefits

a ______ proprietorship is a business owned and managed by a single person.

sole

in a market system, consumers exercise consumer ___________, which is crucial in determining the types and quantities of goods purchased

sovereignty

_________ is the use of resources by an individual, firm, region, or nation to produce one or a few goods or services rather than the entire range of goods and services

specialization

which of the following have historically been used as mediums of exchange?

stones shells metals cigarettes cattle all but human organs

goods and services are produced efficiently when production is organized in combinations and ways:

that minimize the cost per unit of output

In economics, investment describes spending:

that pays for production and accumulation of capital goods

In economics investment describes spending?

that pays for the production and accumulation of capital goods

A budget line describes:

the alternative combinations of two goods that a buyer can purchase with a given money income

Jill is unemployed and decides to spend the day at the spa. Jill's opportunity cost of spending a day at the spa is equal to:

the daily spa rate, any other monetary expenses, and the value of the best alternative activity in which Jill could be engaged

In a world of scarcity, _____.

the decision to obtain the marginal benefit associated with some specific option always includes the marginal cost 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 ______.

the economizing problem

which of these countries or areas have transformed from a pure command economy to a market-orientated economy?

the former soviet union

which of the following describes how a market system decides what will be produced?

the goods and services produced at a continuing profit will be produced, and those produced at a continuing loss will not

External costs are partly caused by:

the growth of a modern economy.

The outward bowing shape of the production possibilities curve is due to ______.

the law of increasing opportunity costs

What is the result from scarcity with respect to economic resources?

the production of limited goods and services

the "invisible hand" guides firms and resource suppliers, in seeking to further their own interests, by promoting _____.

the public or social interest

What is the importance of the PPC?

to show the different combinations of goods and services that society can produce efficiently, inefficiently, given a fixed amount of resources, and in a fully employed economy

which of the following best exemplifies a noncoincidence of wants?

tom wants cherries from jack. jack wants mary's oranges but not tom's apples. mary wants some of tom's apples but not jack's cherries.

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.

trade-off; an opportunity

T/F: Technology and capital goods are synonymous concepts in a market system

true

T/F: freedom of choice allows workers to enter any line of work for which they are qualified. it also ensures that consumers are free to buy the goods and services that best satisfy their wants

true

T/F: in a command system, the government or state decides how a country's resources will best be utilized

true

TRUE/FALSE GDP is not necessarily a good measure of social welfare

true

a person's income depends on the quantities of property and human resources that the person supplies to the market and the prices the resources command in the resource market

true

in which country is laissez-faire capitalism most likely to be practiced?

united states

For better or worse, people have virtually ____ wants.

unlimited

People desire goods and services that provide maximum utility. In fact, our desires or wants are ______.

unlimited

People desire goods and services that provide maximum utility. In fact, our desires or wants are:

unlimited

The economic question of '____ to produce' is about decisions related to the mix of goods and services to make available in a given economy

what

Positive economics is concerned with ______, whereas normative economics deals with _______.

what is; what ought to be

Positive economics is concerned with___, whereas normative economics deals with ____.

what is; what should be

Because consumers behave in a rationally self-interested manner, the consumer will purchase a good or service:

when the marginal benefit is greater than or equal to the marginal costs

Individual Demand for Product

• Tastes • Income • Expectations • Other Goods

True or false: All, but the super wealthy, have a finite or limited amount of income.

False

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

Macroeconomics

____________________ (Microeconomics/Macroeconomics) is the discipline of economics concered with individual units such as households, firms, and government.

Microeconomics