Macro - Chapter 1
The statement that the United States saw the unemployment rate peak at 10 percent in 2009 is a __________ statement since it describes what people ___________.
positive; actually do.
The amount produced by sellers must be _______________ the amount purchased by buyers.
equal to
When deciding whether to install visible countdown timers for pedestrians at crosswalks, which of the following would be considered in the cost-benefit analysis?
-The value of the pedestrians' lives saved by having the timers to assist in crossing the street. -The cost in terms of dollars of installing these new timers all over the city. -The higher maintenance bill associated with fixing these more complex signals when they break down. -The value of the lives lost by drivers who watch the countdown timers and try to make it through a light.
Which of the following is subject to the free-rider problem? National security. A neighborhood watch. Public libraries. All of the above.
All of the above
Suppose that you allocate $20 each week for your entertainment budget. This money is spent on two items: either renting movies for $1 each at Redbox or downloading songs from iTunes at $1 each. Given this information, which of the following would represent your budget constraint for entertainment?
Amount spent on iTunes + Amount spent at Redbox = $20.
A surge in cocoa prices is ____________ and a pest attack on the cocoa crop is ____________.
An effect; the cause
Which of the following is not an example of a causal claim? A) talking on the phone while driving will lead to car accidents. B) It rains more often on days you wash your car. C) Playing contact sports will lead to knee injuries. D. All of the above are examples of causal claims.
B
Which of the following is true regarding the concept of causation? A) It states that if event A causes event B, then event B cannot have a causal effect on event A. B) For any two events that occur, economists state that the first must have caused the second, since it came first. C) It describes how one event can bring about change in another. Your answer is correct. D) It states that if event A causes event B, then event B must also cause event A.
C
In which of the following areas will taking an economics course help benefit you throughout your life? A) It will instill the concept that what activity is given up by a decision plays an important role when making choices. B) It will help you analyze and predict human behavior in a variety of situations. C) It will give you the logic behind using cost-benefit analysis when evaluating decisions. D) All of the above.
D
Suppose your New Year resolution is to get back in shape. How would you evaluate your options and choose an optimal one?
Do a cost-benefit analysis to compare the alternatives.
Economics, anthropology, psychology, sociology, and political science all study human behavior. Economics differs from these other social sciences because it also addresses these three key concepts:
Optimization, equilibrium, and empiricism.
Optimization describes a situation where
People weigh costs and benefits when making decisions.
Let's say that you are trying to decide what to do on Friday at 11 a.m. You rank your possible options from the one you value the most to the one that you value the least in the following order: going to class, sleeping in late, going to work early, getting lunch, going to the gym to exercise, and watching television. If you decide to go to class, then what do we know about the opportunity cost of your decision?
The opportunity cost would be sleeping in late, since it was your next-best option.
Which of the following is more susceptible to the free-rider problem: state parks or street lights?
Use of street lights is more susceptible since even those who don't pay taxes still benefit, while state parks can charge for admission, so that everyone who goes pays their share.
Economics is divided into two broad fields of study: microeconomics and macroeconomics. Microeconomics studies _________, while macroeconomics studies _________.
a small piece of the overall economy; the economy as a whole.
The definition of economics states that it is the study of how...
agents choose to allocate scarce resources and the impact of those choices on society.
Lower infant mortality is ___________ and an improvement in nutrition is ______________.
an effect; the cause
When making your decision about which activity to choose, you should consider the monetary cost _______________, the opportunity cost of the activities. The goal is to choose the option that offers the greatest ______ benefit.
as well as; net
Policy decisions made by the government are analyzed by
both microeconomics and macroeconomics.
Empiricism describes a situation where
economists use data to analyze what is happening in the world.
Buyers must place a value on the uses of the product that is __________________ the cost of buying the product.
greater than
The costs of making a product must be _______ the final price at which the product sells.
less than
A policy such as passing an economic stimulus to spur the economy would be studied under _________, since it deals with ___________.
macroeconomics, the economy as a whole.
Equilibrium describes a situation where
no one would benefit from changing his or her behavior
The statement that the United States has too many illegal immigrants is a ___________ statement, since it describes what people ___________.
normative; ought to do.
The ethical implications of a hotly debated government policy would best be considered a
normative question, since it deals with a subjective issue based on personal preferences.
The goal of optimization for an individual is to maximize
overall well being
Free riding occurs when ________ are out of sync with ________
peoples private benefits ; the public interest.
During the process of optimization economists believe that people are considering _________.
the feasibility of a choice, given the information available at the time.
Your budget constraint for entertainment illustrates the concept of ____________, since as you increase your purchases of one item, you ___________________.
trade offs; must decrease your purchases of the other item.
The opportunity cost of an activity is a measure of ______________________, when you do that activity.
what is given up
Comparing a set of feasible alternatives and picking the best one is an optimization process called
cost-benefit analysis.