Macro-Define Economics

Which example is most likely an economic assumption?

All people act out of self-interest.

Which of the following shows a contrast between Economist A, who is concerned with individual liberty, and Economist B, who is concerned with an unfair distribution of power?

Economist A wants less government involvement; Economist B wants more government programs.

Which of the following is an accurate statement about economists?

Economists agree more than the media lead people to believe.

Which of the following examples best shows scarcity?

Juan decides to save 20 percent of his limited income.

Which of the following is an example of a normative question?

Should the government increase spending for education?

Why must a good economic theory use abstraction?

The world is too complex to analyze without it.

Which of the following statements accurately shows the relationship between scarcity and resources?

There is a limited amount of inputs.

Suppose that unemployment increased last year in the United States by 5 percent. Which of the following questions would a positive analysis answer?

Will the causes of the unemployment continue to affect the economy?

Which of the following is an accurate definition of a resource?

an input used to produce goods and services

The executives of a firm want to find out how much the demand for their product will change in the next six months and how they should adjust their supply to deal with this. This example shows ______.

both normative and positive concerns

Which of the following describes the role of an entrepreneur?

combines resources of labor, land, and capital to produce goods and services

Which of the following is an accurate statement about economist?

economist who try to be objective have some bias in their studies

What would it take to overcome scarcity?

having unlimited resources

The word economics is derived from the Greek word Oeconomicus, which refers to the management of ______.

household affairs

Why are observation and prediction more difficult for an economist than for a chemist?

human behavior is more variable than the behavior of chemicals in a lab

What do economists call the factor payments that go to capital?

interest

why do economist say everyone faces scarcity

no one can have all the goods and services they desire

Most economic disagreements are about ______ issues.

normative

To avoid increasing the national debit, the federal government should increase income taxes. This is an example of a ______.

normative statement

Which of the following are necessary components of a positive statement?

objective; testable

Economists become scientists when they deal with ______.

positive analysis

Normative analysis is concerned with how things ______.

should be

What is the difference between a positive statement and a normative statement?

A positive statement is objective; a normative statement is contestable.

Which of the following questions would economists most likely disagree about?

How much should a company increase the price of a product?

Why are observation and prediction more difficult for an economist than for a chemist?

Human behavior is more variable than the behavior of chemicals in a lab.

Robots are used to produce automobiles. The robots would be considered to be

resources

which of the following items are labor cost related to a sign business

salaries and benefits paid to employees

Which of the following are three key components of the economic problem?

scarcity; choice; giving up valuable opportunities

Which of the following components are involved in microeconomics?

smaller economic units; households; income distribution

Which of the following examples would most likely involve an economist?

studying people in a mall

Normative analysis in a(n) ______ approach.

subjective

Which of the following are necessary components of a normative statement

subjective; contestable

Which of the following are necessary components of a normative statement?

subjective; contestable

Distinguish between the money and non-money costs parents face when raising a child. Money costs might include ______, whereas non-money costs might include ______.

tuition for music lessons; volunteering in the child's classroom

How are economic theories like a road map?

They both ignore irrelevant details.

How are economic abstractions similar to economic assumptions?

They both simplify.

Why do economist make assumptions?

To simplify and thereby make the world more understandable

Robert uses his drawing skill to create medical illustrations for a company that makes medical equipment. Robert's drawing skill is an example of ______.

a resource

As defined in economics, why does scarcity exist?

Human wants exceed available resources.

Which of the following is an example of a normative statement?

If the price of CDs drops significantly, the CEO should sell BlankCD, Inc.

Which of the following questions would require positive analysis?

If the price of cotton decreases by 6 percent, what effect will this have on demand?

Which of the following is an example of a positive statement?

If the price of movie tickets increases, theatrical attendance will decrease.

A good economic theory or model weeds out unimportant facts from important ones. This process is called ______.

abstraction

Which of the following is the unifying issue of economics?

choices

Which of the four categories of resources used in production refers to the physical and mental effort expended by people?

labor

Which of the following examples would an economist concerned about individual freedom and liberty most likely support?

less government involvement in business

A(n) ______ statement is an objective, testable statement that describes what happens and why it happens

positive

Which of the following would most likely tell an economist if a policy is efficient?

positive analysis

Luke recently attended a large pop culture convention in another state. What would be the money costs Luke incurred to attend the show?

the payments for the pass, airline, and hotel bill

___ and ___ are explanations of how things work that help us understand and predict how and why economic agents such as consumers an productions firms governments and so on behave the way they do

theories and models

Which of the following is the best example of an abstraction that would be used in an economic theory?

there are two companies producing tennis rackets

In modern culture, which of the following has probably become the most precious resource?

time

Thomas decides to study late into the night. However, as a result, he doesn't get enough sleep and is tired the next day. This example shows the scarcity of ______.

time

In the hope of getting promoted, Inez agreed to work overtime at her job, which meant she could not meet with her study group as planned. If she impressed her boss, she would increase her paycheck. She could study for the exam on her own, even if it meant a slightly lower grade. What concept in economic decision making does this scenario represent?

trade-off