Chapter 1.2
What comes under the purview of microeconomics?
An increase in the price of a good due to a sudden increase in its quantity demanded.
A company is likely to _____ before launching a new product in a market.
Conduct a marginal analysis
What is true of an economic choice?
Economic choice is based on a comparison of the expected marginal benefit and the expected marginal cost of the action under consideration.
_____ is the study of the economic behavior of entire economies.
Macroeconomics
_____ can be useful in analyzing how a choice affects a particular market and shapes the economic system as a whole.
Marginal analysis
_____ focuses on individual economic choices and market coordination of these choices.
Microeconomics
One of the main assumptions in economics is that:
People are rational.
The Sanders visited a number of car showrooms in their city and read a lot of reviews in journals and online before deciding on a car. This shows that:
Rational individuals may invest a lot of time and collect information before making a decision.
The economic concept of _____ is the attempt made by people to minimize the expected cost of achieving a given benefit.
Rational self-interest
Rational self-interest:
Results in the maximization of individual satisfaction.
Rational decision makers continue to acquire information as long as:
The additional benefit expected from that information exceeds the additional cost of acquiring it.
The lower the personal cost of helping others, _____.
The more help we offer
_____ refers to incremental, additional, or small changes in economic conditions relative to the status quo.
The term Marginal analysis
Which of the following are necessary to make a rational choice?
Time and information, which are both scarce and valuable.