ECO 2013 Module 1 The Study of Economics

Which of the following is a normative statement?

A camera makes a good wedding gift.

Economic theory asserts that people will behave in ways that:

will enhance their own overall well-being.

Suppose that you have a choice between two activities. The first activity is going to the movies, which costs $10 for a ticket and $15 for popcorn, candy and a drink. The second activity is going to a football game where your ticket is free, but food and drinks cost you $15. What is the opportunity cost of going to the movies?

$10 and the enjoyment from the football game.

Scarcity of resources:

means that choices have to be made.

An opportunity cost arises:

whenever any choice is made.

With which one of the following statements would economists most likely disagree?

Resources and inputs used in production are unlimited.

Suppose you get a scholarship to go to college so that tuition is free. The college education will increase your income by $500,000 over your lifetime. Your other alternative is to work in a job after high school. You would be paid $35,000 per year. Room and board in both cases costs you $20,000 per year. Compare the opportunity costs of the two activities.

The opportunity cost of college is less than the opportunity cost of working.

Which of the following would be considered a question that is about macroeconomics and not microeconomics?

Which policy change (raising government spending or decreasing taxes) is more effective in decreasing the overall unemployment rate in a recession?

The purpose of an economic system is to:

allocate scarce resources.

Economists generally agree that people are most likely to change their behavior when they:

are given incentives to do so.

The condition of scarcity means that:

choices must be made in the allocation of productive resources.

Which of the following is not one of the categories of the factors of production?

economic aggregates

Macroeconomics is the branch of economics studying:

fluctuations in the overall level of business activity.

All economic activities involve:

individual choice.

The focal point of economic inquiry is:

individual choice.

After finishing high school, LeBron James decided to enter the NBA rather that going to college to begin his studies to become a doctor. This choice between the two careers can best be described by:

opportunity cost.