Econ 202 Chapter 2
Which of the following can be derived from other assumptions of economics
- Tradeoffs. - Opportunity costs.
Using basic assumptions you can determine
- Why markets are efficient. - When markets are efficient. - When government intervention helps or hurts economic performance
Which of the following can be derived from other assumptions about numbers.
-Subtraction. - Multiplication. - Division
Which of the following is a normative economic statement?
Farmers should not be allowed to grow and sell genetically-modified crops
Which of the following is a positive economic statement?
If the price of beef falls, a larger quantity of it will be bought.
Which of the following is a positive economic statement?
If the price of iPhones falls, a larger quantity of iPhones will be purchased.
Making optimal decisions "at the margin" requires
Making optimal decisions "at the margin" requires
The extra cost associated with undertaking an activity is called
Marginal cost
The video describes the steps in simple arithmetic as proceeding from
Numbers to cardinal numbers to addition to subtraction to multiplication to division.
The best alternative use of a resource is referred to as its:
Opportunity cost
Which of the following is a normative economic statement?
Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable.
Which of the following is a positive economic statement?
Raising the tax on gasoline raises the selling price of gasoline.
________ occurs when the direction of cause and effect is mixed up in a study.
Reverse causality
Which of the following are assumptions of economics
Scarcity
Which of the following is a positive economic statement?
Scarcity necessitates that people make trade-offs.
Which of the following statements is true?
Testing with data enables economists to distinguish between good models and bad models.
Which of the following is a normative economic statement?
The price of gasoline is too high.
A model refers to:
a simplified description, or representation, of reality.
Economists assume that individuals
are rational and respond to incentives.
Making "how much" decisions involves
determining the additional benefits and the additional costs of that activity.
The opportunity cost of going to an outdoor music festival is
equal to the highest value of an alternative use of the time and money spent on the festival.
Economists assume that rational behavior is useful in explaining choices people make
even though people may not behave rationally all the time.
Marginal utility is the
extra satisfaction received from consuming one more unit of a product.
Positive analysis is concerned with "what ought to be," while normative analysis is concerned with "what is."
false
An item has utility for a consumer if it
generates enjoyment or satisfaction.
An omitted variable is a variable that:
has been left out, and if included, would explain why the variables considered in a study are correlated.
Economists assume that the goal of consumers is to
make themselves as well off as possible.
The extra cost associated with undertaking an activity is called
marginal cost
Suppose that some investors have decided that economic and financial uncertainty have made the prospect of investing in domestic stock markets more risky than investing in foreign stock markets, and therefore choose to invest in foreign markets. By using all available information as they act to achieve their goals, these investors are exemplifying the economic idea that
people are rational.
Suppose the U.S. government encouraged consumers to trade in their old automobiles for more efficient, new models by paying up to $5,000 for the old automobiles. These consumers who did trade in their old automobiles to take advantage of the government offer would be exemplifying the economic idea that
people respond to economic incentives.
Holding all other personal characteristics-such as age, gender, and income-constant, economists would expect that
people with health insurance are more likely to be overweight than people without health insurance.
Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________, meaning they make the best decisions given their knowledge of the costs and benefits.
rationally
By definition, economics is the study of
the choices people make to attain their goals, given their scarce resources.
The principle of opportunity cost is that
the economic cost of using a factor of production is the alternative use of that factor that is given up.
Which of the following is a normative economic statement?
the price of wheat is too low.
A correlation between two variables implies that:
there is a mutual relationship between both the variables.
"An increase in the price of gasoline will increase the demand for hybrid vehicles." This statement is an example of a positive economic statement.
true
When voluntary exchange takes place, both parties gain from the exchange.
true
Economists assume that rational people do all of the following except
undertake activities that benefit others and hurt themselves.
In economics, the term ________ means "additional" or "extra."
weighing the costs and benefits of a decision before deciding if it should be pursued.