CH 1

An example of a positive economic statement is, "An increase in the price of a product causes consumers to purchase more of that product."

True

Normative economic statements refer to what should be.

True

"There should be less discrimination against women" is an example of a positive statement.

False

Which of the following would be a topic considered in the field of macroeconomics?

Studying the amazing recent growth of the Chinese economy.

Households

own and sell resources

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

An increase in the price of gasoline will cause a reduction in the amount purchased

Rational self-interest is equivalent to pure selfishness

False

A market

a. is often a physical place b. facilitates exchanges between buyers and sellers c. typically involves monetary transactions d. might not have well-defined geographical limits

In a circular-flow model, households supply all of the following except

goods and services

In economics, capital is defined as

human creations used in the production process

A normative economic statement

is a statement of what ought to be, not what is

A rational decision maker will take only those actions for which the expected marginal benefit

is greater than or equal to the expected marginal cost

Goods and services are exchanged in

product markets

The labor market is an example of a

resource market

Microeconomics is the study of

the economic behavior of individual decision makers

One might commit the fallacy of composition by concluding that

what is good for the individual is necessarily good for the group

Economics is best defined as the study of how

individuals decide to use scarce resources in an attempt to satisfy their unlimited wants

A resource is something that

is used to produce goods and services

The difference between positive economic statements and normative economic statements is that

positive statements are based on fact while normative statements are based on opinion