Econ Chapter 1

Normative or Positive: "Everyone in the country should be covered by national health insurance."

Normative

Normative or Positive: "The current rate of unemployment of 5 percent is too high."

Normative

The value of the next best alternative not chosen is the

Opportunity cost of a choice

Normative or Positive: "A high rate of economic growth creates more jobs."

Positive

Normative or Positive: "Smokers are more likely to be extraverts than nonsmokers."

Positive

Ceteris paribus means

all other things unchanged.

Economics models are

built using relevant observations, assumptions, and abstractions.

Microeconomics deals with

individual units in the economy.

Water is considered a scarce good rather than a free good because

it has alternative uses.

The economic way of thinking deals with

making choices by comparing marginal costs and marginal benefits.

Statements that make value judgments are

normative.

The fundamental economic questions every economic system must answer are

what, how, and for whom.

Macroeconomics deals with

the analysis of the aggregate values in the economy.

Scarcity is a situation in which

the available resources are not enough to satisfy the wants of the people.

Steven has two hours to complete an assignment in economics or to watch a movie. For Steven, the opportunity cost of spending the two hours watching a movie A) is a lower score in the economics assignment. B) is a higher score in the economics assignment. C) depends on how much he enjoys the movie. D) is nonexistent because the economic assignment is not related to the movie.

A) is a lower score in the economics assignment.

Suppose you observe that the sun rises every morning at the six o'clock business report. If you conclude that the six o'clock business report makes the sun rise, you are committing the fallacy of

false cause.

The problem of determining what goods and services society should produce exists because

resources are scarce