Econ Chapters 1 & 2

Economists assume that people are rational in the sense that A. they use all available information as they take actions intended to achieve their goals. B. they generally make the correct choices. C. they make decisions based on​ total, rather than​ marginal, variables. D. they do not respond to economic incentive

A

Equity is A. the fair distribution of economic benefits. B. always achieved by the market. C. when poorer​ people's income is growing more rapidly than more wealthy​ people's income. D. an exactly equal distribution of income.

A

Macroeconomics is most likely to include the study of A. economic growth. B. firm interaction. C. household choices. D. consumer choices. E. religious decisions.

A

Relative to a market​ economy, a​ centrally-planned economy would be expected to be A. better at neither productive efficiency nor allocative efficiency because the absence of​ market-imposed competition negates the need of firms to satisfy consumer wants or produce using the​ lowest-cost methods. B. better at productive efficiency but not allocative efficiency because costs can be controlled by the government but consumer tastes cannot. C. better at allocative efficiency but not productive efficiency because consumers can be forced to buy in government shops but firm managers can be wasteful because there is no profit motive. D. better at both productive efficiency and allocative efficiency because entrepreneurial greed​ doesn't exist there

A

Scarcity is central to the study of economics because it implies that A. every choice involves an opportunity cost. B. wants are unlimited. C. society must make decisions at the margin. D. economic agents are rational.

A

The Food and Drug Administration​ (FDA) is part of federal​ government's Department of Health and Human Services. Among its other​ functions, the FDA evaluates the safety and effectiveness of drugs and medical devices. FDA approval had to be granted before OraSure was allowed to market its home HIV test. In a centrally planned​ economy, the government decides how resources will be allocated. In a market​ economy, the decisions of households and firms interacting in markets allocate resources. The regulation of the production and sale of drugs and medical devices in the United States is an example of how resources are allocated in a A. market economy because the drug​ development, and the resources allocated to the​ development, occurs in the market. B. centrally planned economy because the government controls whether the drug can be used. C. market economy because the FDA is made up of elected officials. D. centrally planned economy because the FDA is part of the government and this involves central planning

A

The grading system plays an important role in student learning. In their book Effective​ Grading: A Tool for Learning and Assessment in College​, Barbara Walvoord and Virginia Anderson state that ​"grading infuses everything that happens in the​ classroom." They also argue that grading​ "needs to be acknowledged and managed from the first moment that an instructor begins planning a​ class." ​Source: Barbara E. Walvoord and Virginia Johnson​ Anderson, Effective​ Grading: A Tool for Learning and Assessment in​ College, 2nd​ edition, San​ Francisco: Jossey-Bass,​ 2010, p. 1. The grading system used by a teacher can affect the incentives of students to learn the course material by A. altering the payoffs to achieving success on the various components of the course. B. uniformly weighting all course components. C. doubling the points assigned to each component of the course. D. none of the above since student performance is based on innate intelligence.

A

Today, which of the following countries has a centrally planned economy? a.) North Korea b.) Canada c.) Germany d.) United States

A

Trade-offs force society to make​ choices, particularly when answering the following three fundamental​ questions: A. ​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? B. ​One, what goods and services will be​ produced? Two, how will the goods and services be​ produced? Three, is the distribution of goods and services​ fair? C. ​One, what goods and services will be produced in foreign​ countries? Two, who will produce the goods and​ services? Three, who will receive the goods and services​ produced? D. ​One, what goods and services will be produced​ domestically? Two, how will the goods and services be​ produced? Three, is the distribution of goods and services​ fair?

A

When does productive efficiency occur? a.) productive efficiency occurs when production is in accordance with consumer preferences. b.) productive efficiency occurs when an economy no longer relies on voluntary exchange. c.) productive efficiency occurs when a good or service is produced at the lowest possible cost. d.) productive efficiency occurs when an economy achieves equity.

A

Which of the following is a correct statement about a mixed economy? a.) in a mixed economy, most economic decisions are made in markets but the government plays a significant role in the allocation of resources. b.) in a mixed economy, most economic decisions are made by the government but markets plays a significant role in the allocation of resources. c.) in a mixed economy, all economic decisions are made in markets. d.) in a mixed economy, the government makes all economic decisions.

A

Which of the following statements about a hypothesis is​ correct? A. A hypothesis is a statement that could in principle turn out to be incorrect. B. A hypothesis will always incorporate a value judgment. C. To be called a​ hypothesis, a statement must first be shown to be correct. D. A hypothesis is another name for a model

A

Alberto Chong of the University of Ottawa and several colleagues conducted an experiment to test the efficiency of government postal services around the world. They mailed letters to nonexistent businesses in 159 countries and kept track of how many of the letters were returned. Was this test most relevant to evaluating the productive efficiency or the allocative efficiency of these postal​ services? ​ Source: Alberto​ Chong, Rafael La​ Porta, Florencio​ Lopez-de-Silanes, and Andrei​ Shleifer, "Letter Grading Government​ Efficiency," Journal of the European Economic Association​, Vol.​ 12, No.​ 2, April​ 2014, pp.​ 277-299. This test that Albert Chong and his colleagues carried out was most relevant for evaluating the A. productive efficiency of these postal services because the test was designed to measure how much it cost to send and return letters in various countries. B. allocative efficiency of these postal services because the test was designed to measure how often and how quickly the letters sent were returned. C. allocative efficiency of these postal services because the test was designed to measure how much it cost to send and return letters in various countries. D. productive efficiency of these postal services because the test was designed to measure how often and how quickly the letters sent were returned

B

Economists use the word marginal to mean an extra or additional benefit or cost of a decision. An optimal decision occurs when A. marginal benefit is greater than marginal cost. B. marginal benefit equals marginal cost. C. marginal benefit is maximized. D. marginal cost is zero.

B

Germany has a market economy. As​ such, Germany​'s economy​ (relative to centrally planned​ economies) tends to result in A. allocative efficiency and equity but not necessarily productive efficiency. B. productive efficiency and allocative efficiency but not necessarily equity. C. productive efficiency but not necessarily allocative efficiency or equity. D. allocative efficiency but not necessarily productive efficiency or equity. E. equity but not necessarily productive efficiency or allocative efficiency

B

Scarcity implies that every society and every individual face trade-offs because scarcity means that: a.) government is unwilling to redistribute wealth. b.) human wants are greater than what available resources can produce. c.) people are greedy and wont share with others. d.) people refuse to limit their wants

B

Macroeconomics​ examines: A. the economy as a​ whole, such as how much new machinery and equipment an individual firm decides to purchase. B. the economy as a​ whole, such as how rapidly the economy grows. C. policy​ issues, such as how the government can influence the decisions of individual households. D. how individual firms make​ choices, such as how they decide what prices to charge. E. all of the above

B

The economy of East Paragon has been experiencing deflation for the last few​ months, with prices of goods and services declining. Because firms are charging lower​ prices, they expected higher sales.​ However, consumption spending did not increase​ much, resulting in substantial losses for these firms. Which of the​ following, if​ true, explains why consumers did not increase consumption in spite of falling​ prices? A. The government lowered taxes on corporate profits earlier this year. B. Most people were expecting prices to decline further. C. The rate of unemployment in this country is lower than most other developing countries. D. The government recently announced plans to withdraw subsidies on petroleum products. E. The interest rate offered on bank deposits is low

B

Which of the following statements about microeconomics and macroeconomics is​ correct? A. Macroeconomics does not involve the analysis of economic policy. B. Macroeconomics is the study of the economy as a whole. C. Microeconomics does not involve the analysis of economic policy. D. All economic situations can be categorized as being microeconomics or macroeconomics.

B

Which of the following statements is​ correct? A. The word​ "technology" and the word​ "innovation" have the same meaning. B. An innovation is the practical application of an invention. C. An invention is the practical application of an innovation. D. The word​ "technology" and the word​ "invention" have the same meaning

B

According to the FBI Bank Crime​ Statistics, there were nearly​ 4,000 bank robberies in the United States in 2014. The FBI claims that banks have made themselves easy targets by refusing to install clear acrylic​ partitions, called bandit barriers​, that separate bank tellers from the public. According to a special agent with the​ FBI, ​"Bandit barriers are a great deterrent.​ We've talked to guys who rob​ banks, and as soon as they see a bandit​ barrier, they go find another​ bank." ​Sources: U.S. Department of​ Justice, Federal Bureau of​ Investigation, "Bank Crime Statistics​ (BCS) Federally Insured Financial​ Institutions, January​ 1, 2014-December​ 31, 2014,"​ www.fbi.gov; and Richard​ Cowen, "FBI: Banks Are to Blame for Rise in​ Robberies," NorthJersey.com​, March​ 10, 2009. Despite this​ finding, many banks have been reluctant to install these barriers.​ Wouldn't banks have a strong incentive to install bandit barriers to deter​ robberies? Why,​ then, do so many banks not do​ so? A. Banks are not interested in the safety of their customers and employees. B. Banks are not rational. C. Banks have no economic incentive to install the barriers. D. Banks would not receive any benefits from installing the barriers.

C

Allocative efficiency means that A. every good or service is distributed fairly. B. a good or service is produced at the lowest possible cost. C. every good or service is produced up to the point where marginal benefit is equal to marginal cost. D. a good or service is produced as quickly as possible

C

Consider the following​ statement: ​ "The problem with economics is that it assumes that consumers and firms always make the correct decisions. But we know that everyone makes​ mistakes." What is the most correct response to this​ statement? A. Economics has a lot of problems such as those that caused the Great Recession. B. Economics is a proven field of​ study, and it has already solved this problem. C. Economics assumes that consumers and firms are​ rational, not that they always make the right decisions. D. Economics does assume that consumers and firms always make the correct decisions

C

Economic models​ are: A. complex mathematical formulas designed to forecast future economic events such as inflation. B. simplified versions of reality designed to analyze​ "what is" to explain human decision making in a business context. C. simplified versions of reality designed to analyze​ "what is" to explain human decision making in any context. D. simplified versions of reality designed to analyze​ "what ought to​ be" to help the government improve outcomes. E. complex mathematical formulas designed to identify optimal market outcomes and guide policymakers

C

Microsoft charges a price of​ $599 for a copy of Windows 7. Is this pricing decision​ rational? A. ​Microsoft's choice was​ rational: the price will maximize profit. B. We cannot assume that this pricing decision was rational because we do not have enough information to make an assumption. C. When we assume the managers at Microsoft have used all available information and have weighed all known benefits and​ costs, we are assuming rationality. D. ​Microsoft's choice cannot be​ rational: the price is clearly more than most people are willing and able to pay

C

Which of the following best describes​ scarcity? A. Prices of goods are very high. B. Wants cannot be fulfilled and thus all goods must be rationed. C. Unlimited wants exceed the limited resources available. D. Markets cannot properly allocate resources

C

Which of the following statements about an economic variable is​ correct? A. An economic variable is always measured in dollars. B. An economic variable must always be a positive number. C. An economic variable is something measurable that can have different values. D. An economic variable must either be the price of a good or service or the quantity of a good or service

C

A hypothesis in an economic model is A. tested before it can be accepted​ (or not​ rejected). B. a statement that may be either correct or incorrect about an economic variable. C. usually about a causal relationship. D. all of the above

D

A portion of microeconomics​ examines: A. the economy as a​ whole, such as what causes unemployment. B. the economy as a​ whole, such as why some economies have grown faster than others. C. policy​ issues, such as whether government intervention can reduce the severity of recessions. D. how individual firms make​ choices, such as how they decide what prices to charge. E. all of the above

D

A primary difference between macroeconomics and microeconomics is A. There are no true differences between microeconomics and macroeconomics. B. Microeconomics is concerned with present decisions while macroeconomics is concerned with future decisions. C. Microeconomics is concerned with market economies while macroeconomics is concerned with​ centrally-planned economies. D. Microeconomics examines individual markets while macroeconomics examines the economy as a whole

D

According to Forbes​ magazine, in 2015 Bill Gates was the​ world's richest person with wealth of​ $79.2 billion. ​Source: ​"The World's​ Billionaires," forbes.com​, March​ 2, 2015. Does Bill Gates face​ scarcity? A. ​No, because billionaires can have anything that money can buy. B. ​Yes, because there is a limit to the income even billionaires can earn. C. ​No, because if a billionaire cannot get the goods and services they​ want, someone else can get it for them. D. ​Yes, because even though​ billionaires' financial resources enable them to afford a much greater array of goods and services than those less​ wealthy, their financial resources are not infinite

D

Consider an organization that exists to help the poor. The members of the organization are discussing alternative methods of aiding the​ poor, when a proponent of one particular method asserts​ that: ​"If only one poor person is helped with this​ method, then all our time and money would have been worth​ it." If you were a member of the​ organization, what reply best represents clear economic​ thinking? This attitude A. recognizes the fact that since the organization is a​ charity, there is an opportunity cost based on the square root of other​ peoples' needs. B. acknowledges the importance of considering all the alternatives. C. is the most logical because it is focussed on helping even one person. D. ignores the fact that the cost of helping that one person has an opportunity cost of what those funds could have been used for to help other people.

D

According to the FBI Bank Crime​ Statistics, there were nearly​ 4,000 bank robberies in the United States in 2014. The FBI claims that banks have made themselves easy targets by refusing to install clear acrylic​ partitions, called bandit barriers​, that separate bank tellers from the public. According to a special agent with the​ FBI, ​"Bandit barriers are a great deterrent.​ We've talked to guys who rob​ banks, and as soon as they see a bandit​ barrier, they go find another​ bank." ​Sources: U.S. Department of​ Justice, Federal Bureau of​ Investigation, "Bank Crime Statistics​ (BCS) Federally Insured Financial​ Institutions, January​ 1, 2014-December​ 31, 2014,"​ www.fbi.gov; and Richard​ Cowen, "FBI: Banks Are to Blame for Rise in​ Robberies," NorthJersey.com​, March​ 10, 2009. Despite this​ finding, many banks have been reluctant to install these barriers.​ Wouldn't banks have a strong incentive to install bandit barriers to deter​ robberies? Why,​ then, do so many banks not do​ so? A. Banks would not receive any benefits from installing the barriers. B. Banks are not rational. C. Banks are not interested in the safety of their customers and employees. D. Banks have no economic incentive to install the barriers

D

Best​ Goods, one of the leading department store​ chains, offers goods at low prices. It recently opened many new stores across the country. After successfully setting up stores in most major​ cities, Best Goods faced substantial opposition in the city of​ Joberg, where lobbyists for smaller general stores​ (local businesses) opposed its entry. These lobbyists argued that Best Goods would put many local stores out of business and would also increase income inequality and unemployment in the city. Which of the​ following, if​ true, would strengthen the stand of the​ lobbyists? A. The level of unemployment in Joberg is low. B. Retail profits grew only by two percent this year. C. Many consumers prefer to shop in local stores because they offer goods on credit. D. The quality of goods offered at Best Goods is usually the same quality as those offered at local stores. E. Best Goods created​ 15,000 jobs in the last year.

D

Best​ Goods, one of the leading department store​ chains, offers goods at low prices. It recently opened many new stores across the country. After successfully setting up stores in most major​ cities, Best Goods faced substantial opposition in the city of​ Joberg, where lobbyists for smaller general stores​ (local businesses) opposed its entry. These lobbyists argued that Best Goods would put many local stores out of business and would also increase income inequality and unemployment in the city. Which of the​ following, if​ true, would weaken the stand of the​ lobbyists? A. Compared to most other cities in the​ country, the average income level of​ Joberg's population is higher. B. The country has a proportional tax​ structure, where the amount of tax paid is proportional to income earned. C. The price level in the economy has been rising in the recent past. D. It is common for traditional retailers to modernize and successfully compete with organized retailing. E. The net impact on employment in Joberg is expected to be negative

D

Consider the following​ statement: ​ "The problem with economics is that it assumes that consumers and firms always make the correct decisions. But we know that everyone makes​ mistakes." What is the most correct response to this​ statement? A. Economics does assume that consumers and firms always make the correct decisions. B. Economics has a lot of problems such as those that caused the Great Recession. C. Economics is a proven field of​ study, and it has already solved this problem. D. Economics assumes that consumers and firms are​ rational, not that they always make the right decisions

D

In a market system, how does society decide what goods and services will be produced? a.) Consumers determine who receives the goods and services produced. b.) The government determines the goods and services produced. c.) Firms determine who receives the goods and services produced. d.) Who receives the goods and services produced depends largely on how income is distributed.

D

Macroeconomics is the study of A. the economy on a​ state-by-state basis, covering areas affected by the Commerce Clause. Your answer is not correct.B. why the U.S. has spent so much money on wars and government surveillance of its own citizens. C. how households and firms make​ choices, how they interact in​ markets, and how the government attempts to influence their choices. D. the economy as a​ whole, including topics such as​ inflation, unemployment, and economic growth.

D

Microeconomics is the study of A. the economy as a​ whole, including topics such as​ inflation, unemployment, and economic growth. B. how individuals make good decisions for themselves but hurt society. C. how individuals and firms act altruistically to better society. D. how households and firms make​ choices, how they interact in​ markets, and how the government attempts to influence their choices.

D

Productive efficiency means that A. a good or service is produced as quickly as possible. B. every good or service is distributed fairly. C. every good or service is produced up to the point where marginal benefit is equal to marginal cost. D. a good or service is produced at the lowest possible cost.

D

The three economic questions that every society must answer are A. What economic system will be​ used, how will it be​ implemented, and who will make market​ decisions? B. What kind of government will the society​ have, how will it be​ run, and who will run​ it? C. What are the prices of​ goods, how are they​ determined, and who will pay for​ them? D. What goods will be​ produced, how will they be​ produced, and who will receive the​ goods?

D

When does allocative efficiency occur? a.) allocative efficiency occurs when an economy no longer relies on voluntary exchange. b.) allocative efficiency occurs when an economy achieves equity. c.) allocative efficiency occurs when a good or service is produced at the lowest possible cost. d.) allocative efficiency occurs when production is in accordance with consumer preferences.

D

Which of the following statements about economics as a social science is​ correct? A. Economics considers human behavior only in the context of business. B. Economics uses normative analysis but not positive analysis. C. Economics is not useful in analyzing the effects of government policy. D. Economics studies the actions of individuals.

D

Which of the following statements about microeconomics and macroeconomics is​ correct? A. All economic situations can be categorized as being microeconomics or macroeconomics. B. Macroeconomics does not involve the analysis of economic policy. C. Microeconomics does not involve the analysis of economic policy. D. Microeconomics involves the study of how households and firms make choices

D

Which of the following statements is​ correct? A. A business has multiple​ locations, while a company has only a single location. B. A business is always larger than a firm. C. A company is owned by one​ person, while a firm is owned by more than one person. D. Economists use the terms​ firm, company, and business interchangeably

D

Why are models based on​ assumptions? A. Because models are only concerned about questions of​ equity, not question of efficiency. B. Because models are not intended to analyze​ real-world events. C. Because models are very different from theories. D. Because models have to be simplified to be useful

D

Economics assume people and firms: A. are​ rational, respond to​ incentives, and make​ all-or-nothing decisions. B. are rational​, respond to​ incentives, and make decisions by comparing total benefits with total costs. C. always make the best decisions​, respond to​ incentives, and make decisions by comparing marginal benefits with marginal costs. D. use all available information to achieve their​ goals, respond to​ incentives, and make decisions by continuing any activity up to the point where the marginal benefit equals zero. E. use all available information to achieve their goals​, respond to​ incentives, and make decisions by comparing marginal benefits with marginal costs

E

Harry Fletcher is a market analyst at an automobile firm. He forms a hypothesis that an increase in advertising will increase the demand for the​ firm's cars. Which of the​ following, if​ true, may result in the rejection of his​ hypothesis? A. The demand for car accessories has significantly increased in the past few years. B. As air travel picks​ up, demand for car rentals is also expected to increase. C. The demand for sedans has traditionally been higher than the demand for hatchbacks. D. Automotive franchise establishments are expected to report an annual increase of 4 percent this year. E. Car buyers base their purchasing decisions on independent reviews

E

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? A. Firms determine what goods and services are​ produced, technology determines how to produce​ them, and markets determine who will receive them. B. Consumers determine what goods and services are​ produced, firms determine how to produce​ them, and equity determines who will receive them. C. The government determines what goods and services are​ produced, how to produce​ them, and who will receive them. D. Firms determine what goods and services are produced and how to produce​ them, and markets determine who will receive them. E. Consumers determine what goods and services are​ produced, firms determine how to produce​ them, and markets determine who will receive them

E

Jonathan Baker is a market analyst. He works at a firm that is one of the few producers of good X. Jonathan formulates a hypothesis that an increase in advertising will increase the demand for this​ firm's products by attracting new customers. Which of the​ following, if​ true, would suggest that​ Jonathan's hypothesis will​ hold? A. Other firms will respond by increasing their own advertising. B. All rival firms have a higher market share. C. Import restrictions are preventing firms from achieving productive efficiency. D. According to research​ reports, consumer choices remain unchanged in the short run. E. Even​ brand-loyal consumers can be convinced to change their preferences

E

Many universities and corporations offer a health wellness program that helps their employees improve or maintain their health and get paid​ (a relatively small​ amount) for doing so. The programs​ vary, but typically consist of employees completing a health​ assessment, receiving a healthy living​ program, and monitoring their monthly health activities. Corporations and universities are willing to pay employees to take care of themselves because a healthier workforce A. translates into lower​ costs, in part by reducing​ illness-related absenteeism and premature retirements. B. performs more​ efficiently, thereby improving overall productivity in the workplace. C. is a happier workforce and thus less likely to become confrontational with management. D. all of the above. E. A and B only.

E

Suppose, in an effort to prevent the population from​ declining, Italy begins offering new mothers extended periods of paid family leave from work​ and, consequently, the birthrate per woman increases. If​ so, then this could best be characterized as an example of people responding to A. accounting principles. B. envy. C. compassion. D. religious beliefs. E. economic incentives

E

Xylo​ Inc., a manufacturer of domestic​ appliances, lowered the prices of its​ products, expecting an increase in demand and sales by at least 20 percent.​ However, it was observed that sales increased by only 8 percent. Which of the​ following, if​ true, can explain this​ outcome? A. Xylo sells its products online through multiple web sites to lower its operating costs. B. Most consumers feel​ that, on​ average, Xylo's products have better features than what rival firms offer. C. Xylo launched a new range of air conditioners this year. D. Almost 30 percent of​ Xylo's output is exported. E. The government increased personal income tax rates earlier this year.

E

A ______________ economy is an economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources

Mixed

Suppose an analyst estimates how many jobs have been lost from family leave laws. This is an example of __________.

Positive analysis

Leonard​ Fleck, a philosophy professor at Michigan State​ University, has​ written, ​"When it comes to health care in​ America, we have limited resources for unlimited health care needs. We want everything contemporary medical technology can offer that will improve the length or quality of our lives as we age. But as presently healthy​ taxpayers, we want costs​ controlled." ​Source: Leonard​ Fleck, Just​ Caring: Health Care Rationing and Democratic Deliberation. New​ York: Oxford University​ Press, 2009. Is it necessary for all economic systems to limit services such as health​ care?

Yes

Economists assume that people are rational in the sense that: a.) they use all available information as they take actions intended to achieve their goals. b.) they make decisions based on total, rather then marginal, variables. c.) they generally make the correct choices. d.) they do not respond to economic incentives.

a

How are economic resources allocated in a market economy? a.) by the decisions of households and firms interacting in markets b.) by consumers acting alone c.) by firms acting alone d.) by the government

a

When economists develop models designed to explain the choices people make, they generally assume that: a.) people are rational b.) people make the best decisions. c.) everyone knows everything. d.) consumers do not use all available information. e.) consumers do not act to achieve their goals.

a

If a firm is productively and allocatively efficient, it earns _________; if it is not, it ___________.

a profit, suffers a loss

A market is a group of _____ of a good or service and the institution or arrangement by which they come together to trade.

buyers and sellers

In a market system, what determines how goods and services will be produced? a.) Consumers, firms, and the government determine together how goods and services will be produced. b.) The government determines how goods and services will be produced. c.) Firms determine how goods and services will be produced. d.) Consumers determine how goods and services will be produced.

c

Why might studying economics be particularly good preparation for being the top manager of a corporation or a leader in government? a.) Economics is less of an issue as you climb the corporate ladder because you usually hire accountants to handle your money b.) economics is just as valuable to a cashier as it is for a CEO. c.) economics teaches us how to look at the tradeoffs involved in every decision. d.) management and politics have more to do with public relations than economics.

c

Scarcity is central to the study of economics because it implies that: a.) economic agents are rational. b.) wants are unlimited. c.) society must make decisions at the margin. d.) every choice involves an opportunity cost.

d

Suppose Apple is currently selling 3,000,000 iPods per year. ​ However, managers at Apple are considering whether to increase production by 300, 000 iPods. One manager explains that after increasing production by this​ amount, total profit would be​ $100 million. Given this​ information, should Apple increase production by 300,000 iPods​? A.) No, because increasing production by 300,000 iPods would decrease the price of iPods. B. Yes, because Apple would earn a profit. C. Information about the additional cost incurred from producing 300,000 additional iPods is required to answer this question. D. Information about the additional revenue earned and the additional cost incurred from producing 300,000 additional iPods is required to answer this question. E. Information about the total revenue earned and the total cost incurred from producing 3,300,000 iPods is required to answer this question

d

When the federal government crafts environmental policies that make it less expensive for firms to follow green​ initiatives, a.) the policies are futile because where the environment is concerned, it has been repeatedly shown that firms do not respond to economic incentives. b.) the policies are likely to be more successful than policies that cost firms more, but they do not recognize economic incentives. c.) pollution is likely to increase. d.) the policies are consistent with economic incentives.

d

Which of the following best describes scarcity? a.) markets cannot properly allocate resources. b.) prices of goods are very high. c.) wants cannot be fulfilled and thus all goods must be rationed. d.) unlimited wants exceed the limited resources available.

d

Centrally planned economies allocate resources based on decisions by __________, while market economies answer these questions through decisions made by _________.

government, households and firms

Efficiency means that goods are distributed in a way that ___________​, while equity means that goods are distributed in a way that__________.

maximizes benefits to society, is fair

A firm operating in a market economy has a strong incentive to be productively efficient and allocatively efficient because the former enables it to ____________ while the latter ensures it of ________.

minimize production costs, ample revenues