Prin. of Macroecon. (Chapter 1)

Economic ______________ is the benefit of taking an action minus its cost

(economic surplus)

The total cost of carrying out n units of an activity dividing by n is the activity's _____________ cost.

Average cost

Macroeconomics is the study of

The performance of national economies and the policies that governments use to try to improve that performance.

The shift from the "Old" to the "New" line in the accompanying graph represents: (y has completely shifted upwards, causing a parallel line to form over the old)

an increase in the vertical intercept

People sometimes apply the Cost-Benefit Principle incorrectly because they evaluate costs and benefits:

as proportions rather than absolute dollar amounts

Economists believe that people

never have enough time, money, or energy to do everything or have everything they want.

According to the Cost-Benefit Principle, an individual or society should:

take an action if, and only if, the extra benefits from taking the action are at least as great as the extra costs.

The shift from the "Old" to the "New" line in the accompanying graph represents (y constant/line simply shifts upwards from one end):

An increase in the slope

Average Benefit

Cost of total benefit divided by the units of an activity n/n

_____________ is the study of how people make choices under conditions of scarcity and the results of those choices for society as a whole.

Economics

When deciding whether to take an action, one common decision pitfall is to:

Ignore the implicit cost of the action

The ______________ Principle states that a person (or a firm or society) is most likely to take an action if its benefit rises, and less likely to take an action if its cost rises.

Incentive (Principle)

A(n) ______________ variable in an equation determines the value taken by another variable in the equation

Independent (variable)

Microeconmics is the study of

Individual choice under scarcity and its implications for the behavior of prices and quantities in individual markets

The increase in total costs that results from carrying out one additional unit of an activity is its _____________ cost

Marginal (cost)

a ______________ economic principle is one says how people should behave

Normative (economic principle)

The value of what must be foregone in order to undertake an activity is the _______ cost of that activity.

Opportunity (cost)

the value of what must be foregone in order to undertake an activity is the ______________ cost of that activity

Opportunity (cost)

A ____________ economic principle is one that predicts how people will behave.

Positive (or descriptive) (economic principle)

The _______________ Principle states that although we have boundless needs and wants, the resources available to us are limited, so having more of one good thing usually means having less of another.

Scarcity (Principle)

Which of the following is a normative economic principle?

The Cost-Benefit Principle

Learning more about economic models

can help us make better decisions even if most people don't consciously use economic models to make decisions

A quantity that is fixed in value is known as a(n):

constant

If undertaking an activity includes both explicit and implicit costs, then, according to the textbook, the opportunity cost of that activity:

is the sum of its explicit and implicit costs

A variable in an equation whose value is determined by the value taken by another variable in the equation

dependent variable

In the graph of a straight line, the vertical intercept is the value taken by the:

dependent variable when the independent variable is equal to zero (vertical intercept)

A mathematical expression that describes the relationship between two or more variables is called a(n) ___________

equation

The Scarcity Principle captures the notion that although we have boundless needs and wants, the resources available to us are limited, so

having more of one thing usually means having less of another

The marginal cost of carrying out an activity is the

increase in total cost that results from carrying out one additional unit of an activity.

In Economic, a ____________ individual is someone with well-defined goals who tries to fulfill those goals as best he or she can.

rational (person/individual)

Along a straight line, the __________ is the ratio of the vertical distance the straight line travels between any two points (rise) to the corresponding horizontal distance (run).

slope

A cost that is beyond recovery at the moment a decision is made is a(n):

sunk cost

A quantity that is free to take on different values is a(n):

variable