Micro Econ Homework 1 & DSM

Trade-offs force society to make choices, particularly when answering the following three fundamental questions:

1. What goods and services will be produced? 2. How will the goods and services be produced? 3. Who will receive the goods and services produced?

Which of the following is a positive economic statement

If minimum wage rates rise, then unemployment will rise.

Which of the following countries has an economy where most of the resource allocation is determined by a central planning authority?

North Korea

Which of the following best defines scarcity?

Unlimited wants exceed the limited resources available.

Microsoft charges a price of $599 for a cop of Windows 7. Is this pricing decision rational?

When we assume the managers at Microsoft have used all available information and have weighed all known benefits and cots, we are assuming rationality.,

One of the first steps in deciding whether to compete your education is to

evaluate the marginal cost and marginal benefit of that decision.

What is the name given to the development of a new good?

invention

Firms choose how to produce the goods and services they sell. In many cases, firms face a trade-off between using more workers or using more machines. For example,

many times in the past several decades, firms may have chosen between a production method in the United States that uses fewer workers and more machines and a production method in China that uses more workers and fewer machines.

Economists believe that an individual or firm should continue any activity until

marginal benefit is equal to marginal cost

The resources provided by nature and used to produce goods and services are also known as

natural resources

concerned with what ought to be

normative analysis

Macroeconomics is concerned with all of the following except

political party affiliation

concerned with what is

positive analysis

measures the costs and benefits of different courses of action

positive analysis

Occurs when a good or service is produced at the lowest possible cost

productive efficiency

Scarcity is central to the study of economics because it implies that

every choice involves an opportunity cost.

Tangible products like cars and televisions are referred to as

goods

economics

is concerned with how people respond to incentives

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.

Economic decisions are made at every level in society. When we try to decide which production method to use among several alternatives, which of the following key economic questions are we trying to answer?

How do we produce the products?

In what type of economy does the government decide how economic resources will be allocated?

a centrally planned economy

When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?

a market

Occurs when production is in accordance with consumer preferences

allocative efficiency

Goods ad services are those bought by businesses to be used to increase efficiency or enhance production.

capital

Economy in which the government decides how economic resources will be allocated

centrally planned

Decided what goods and services will be produced

consumers, firms and government

According to the rationality assumption, people

do not intentionally make decisions that would leave them worse off

Macroeconomics can be used to understand all of the topics listed below except

how a consumer decided between the purchases of two different cars

Microeconomics is the study of

how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices.

In the US, who receives the goods and services produced depends largely on

how income is distributed

Economics is a social science because

it considers human behavior-particularity decision-making behavior, it is bases on studying the actions of individuals, and it applies the scientific methods to the study of the interactions among individuals.

The level of total investment b firms in new machinery and equipment helps to determine how rapidly the economy grows. This is a

macroeconomic issue

Economists use the word marginal to mean an extra or additional benefit or cost of a decision. An optimal decision occurs when

marginal benefit equal marginal cost.

Economy in which the decisions of households and firms interacting in markets allocate economic resources.

market

To understand how much new machinery and equipment firms decide to purchase, one must analyze the incentives individual firms face, which is a

microeconomic issue

The US economy is best classified as a

mixed economy

Jim declined to take part in a health study on a free basis but changed his mind after being offered $1,000 to participate in the study, Jim's behavior best illustrates which economic principle?

people respond to economic incentives.

The stock of computers, factory buildings and machine tools uses to produce goods is known as

physical capital

Economics is the study of choice under conditions of

scarcity

The principle of opportunity cost evolves from the concept of

scarcity

Which of the following is not a possible opportunity cost of attending college?

the cost of hosuing

Macroeconomics is the study of

the economy as a whole, including topics such as inflation, unemployment, and economic growth.

Opportunity cost is

the highest valued alternative that must be given up to engage in an activity.