ECON ASSESS CHAPTER 1 QUIZ
___________ is a concerned with what is, and ________ is concerned with what ought to be. Economics is about _____ which measures the costs and benefits of different courses of action
a. positive analysis b. normative analysis c. neutral analysis
How do market economies ultimately determine what goods and services are produced, how the goods and services will be produced, and who will receive the goods and services?
consumers determine what goods and services are produced , how to produce them, and who will recieve them
to develop a model that will answer economic questions, economists typically:
first make simplifying assumptions, then formulate a hypothesis, test the hypothesis, and finally revise the model if necessary.
Economics is a social science because
it applies the scientific method to the study of the interactions among individuals, it considers human behavior-particulary decision-making behavior, and it is based on studying the actions of individuals. [all of the above]
Trade-offs force society to make choices, particularly when answering the following three fundamental questions:
one, what goods and services will be produced? Two how will the goods and services be produced? Three, who will receive the goods and services produced?
the diagram to the right illustrate a very important relationship in economics between two variables: the price of a good and the quantity demanded of that good
price (dollars per bushel) on the vertical axis and quantity (bushels per week) on the horizontal axis
When we graph the relationship between two variables, we often want to draw conclusions about whether changes in one variable are causing changes in the other variable. Doing so, however, can lead to incorrect conclusions. Reasons for drawing incorrect conclusions about cause and effect include
reverse casuality; an omitted variable [both a and b]
equity is
the fair distribution of economic benefits
When the federal government crafts environmental policies that make it less expensive for firms to follow green initiatives,
the policies are consistent with economic incentives
Suppose an analyst estimates the gains to workers from the free trade laws
this is an example of normative analysis
Microsoft charges a price of $599 for a copy of Windows 7. Is this pricing decision rational?
when we assume the managers at Microsoft have used all avalible information and have weighted all known benefits and costs, we are assuming rationality
