Chapter One
The scientific method is the technique used by economists to determine
economic principles.
Suppose a city block was going to be used for a parking lot in both New York City and a small town. The opportunity cost would be
greater in New York City because the alternative uses of the city block are more valuable.
Economists classify resources as
labor, land, real capital, and entrepreneurs
Economic resources are the
natural, human, and manufactured inputs used to produce goods and services.
The number of unemployed workers increases:
no change
Money is not considered a capital resource in economics because money is
not productive
The quality of education increases:
Curve shifts outward
Making choices based on comparing marginal benefits with marginal costs:
Marginal analysis
Last week Wells Fargo Bank lowered its interest rate on business loans by one-half of 1 percentage point:
Microeconomics
3,000 units at which MC = $10 and MB = $13
More
The next-best thing that must be forgone in order to produce one more unit of a given product:
Opportunity cost
Because economic resources are used to produce goods and services, they are called
factors of production or inputs
If current output is such that marginal cost exceeds marginal benefit, should more or fewer resources be allocated to this product?
Fewer
The consumer price index rose by 2.2 percent from November 2017 to November 2018:
Macroeconomics
The unemployment rate in the United States was 3.7 percent in December 2018:
Macroeconomics
U.S. output, adjusted for inflation, increased by 2.3 percent in 2017:
Macroeconomics
A U.S. software firm laid off 15 workers last month and transferred the work to India:
Microeconomics
An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise:
Microeconomics
82 units at which MC < MB:
More
With these curves, the optimal allocation of resources to a particular product will occur when
MB = MC
Suppose that you are given a $100 budget at work that can be spent only on two items: staplers and pens. If staplers cost $10 each and pens cost $2.50 each, then the opportunity cost of purchasing one stapler is:
4 pens.
Why is entrepreneurial ability distinct from labor even though both are considered a category of economic resource?
Because entreprenuerial ability is not directly engaged in production.
43,277 units at which MC = $99 and MB = $99:
Current number
A devastating earthquake destroys numerous production facilities:
Curve shifts inward
A new technique improves the efficiency of extracting copper from ore:
Curve shifts outward
Which of the following is not a key element of the scientific method?
Designing data
The social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity:
Economics
11 units at which MC = $4 and MB = $3:
Fewer
5 units at which MB < MC:
Fewer
Suppose that you initially have $100 to spend on books or movie tickets. The books start off costing $25 each and the movie tickets start off costing $10 each. For each of the following situations, would the attainable set of combinations that you can afford increase or decrease? Your budget increases from $100 to $150 while the prices stay the same: Your budget remains $100, and the price of books remains $25, but the price of movie tickets rises to $20: Your budget remains $100, and the price of movie tickets remains $10, but the price of a book falls to $15:
Increase, decrease, increase
What roles do entrepreneurs play in the economy?
Innovate, take risks, and make decisions
Suppose that, on the basis of a nation's production possibilities curve, an economy must sacrifice 10,000 pizzas domestically to get the 1 additional industrial robot it desires but that it can get the robot from another country in exchange for 9,000 pizzas. Now consider the following statement: "Through international specialization and trade, a nation can reduce its opportunity cost of obtaining goods and thus move outside its production possibilities curve." Which of the following explains the relationship between the situation described and the statement?
Specialization and trade have the same effect as having more and better resources or discovering improved production techniques.
The marginal-benefit curve is (Click to select) sloping.
downward
Which of the following represents a normative economic statement?
The government ought to lower taxes so people have more money.
Which of the following represents a positive economic statement?
The unemployment rate is 4.8 percent.
The pleasure, happiness, or satisfaction obtained from consuming a good or service:
Utility
A student will decide to attend class when
the marginal benefit of attending exceeds the marginal cost of attending
The marginal-cost curve is (Click to select) sloping.
upward
In a market system, the allocation of scarce goods involves the consideration of
what must be sacrificed in using a resource for its next-best use.
