Chapter 1 - The Principles and Practice of Economics

According to the rationality assumption, people:

Do not intentionally make decisions that would leave them worse off.

The measure of benefits minus costs is:

net benefit

The opportunity cost of lying in the sun to get a tan is:

- the potential skin problems that could result from sunlight exposure. - the time you take to lie in the sun. -the next best activity you could do instead of lying in the sun. All of these are the opportunity cost.

An example of subjective judgement would be:

-what level of saving a person will make for future expenditures. -the value of a rock from the moon. -how much risk one is willing to accept to receive a gain. ALL OF THE ABOVE

Which of the following is not an economic agent?

All are economic agents -Corporation -Labor Union -Charity

Which of these covers the study of topics such as inflation and unemployment?

Macroeconomics

Economics differs from these other social sciences because it also addresses these three key​ concepts: _________.

Optimization, equilibrium, and empiricism.

If the president of Colombia commented that "we should do something to reduce inflation in Colombia," this would be an example of:

a normative statement

Economic activities that are feasible have what characteristics:

affordable and available

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.

Empiricism is:

analyzing data or evidence

Empiricism describes a situation where

economists use data to analyze what is happening in the world

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

how a consumer decides between the purchase of two different cars

__________ is the study of how households and businesses make choices, how they interact in markets, and how government influences their choices.

microeconomics

Equilibrium describes a situation where

no one would benefit from changing his or her behavior

Selecting the best feasible option among available manufacturing options is called:

optimization

Optimization describes a situation where

people weigh costs and benefits when making a decision

Macroeconomics is concerned with all of the following except:

political party assumption

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

the cost of housing

A definition of opportunity cost is:

the value of best thing that you give up to get something else.

Which of these is a macroeconomic study?

The study of how fast prices in general are rising.

Facts, measurements, or statistics used to describe something specific are collectively known as:

data

When an investment counselor advises a client as to the risk/return trade-off on an investment, this type of help is called _______________ economics.

prescriptive

when an investment counselor advises a client as to the risk/return trade-off on an investment, this type of help is called _______________ economics.

prescriptive

Economics is the study of choice under conditions of:

scarcity

The principle of opportunity cost evolves from the concept of:

scarcity

Costs that cannot be recovered and therefore aren't relevant to a decision for a future activity are called _______________ costs.

sunk

The optimal economic decision is to continue any activity, investing or otherwise, up to the point where:

the additional benefit of the activity is at least more than the additional cost of the activity