ECONOMICS chapter 1
Approximately what percentage of the world's economies experience scarcity?
100%
Economists would classify all of the following as "land," except:
A hydroelectric dam
Which of the following would not be considered a capital resource by economists?
A van used by a mother to transport the family around
Which of the following is NOT an example of an opportunity cost?
Because Mary is now being paid a higher wage, she can afford to buy a new car even though she is moving into a bigger apartment.
Economics is a social science that studies how individuals, institutions, and society may:
Best use resources to maximize satisfaction of economic wants
The role of the entrepreneur in society is to:
Bring the factors of production together and take the risks of producing
On a production possibilities curve, the single optimal or best combination of output for any society:
Depends upon the preferences of society
Cuba is a command economy that suffered a decline in economic growth because of a cut in the aid provided by the former Soviet Union when the latter collapsed. As a consequence, Cuba:
Experienced an inward shift of its production possibilities curve
A recurring theme in economics is that people:
Have unlimited economic wants, but limited resources
Ben says that "An increase in the tax on beer will raise its price." Holly argues that "Taxes should be increased on beer because college students drink too much." We can conclude that:
Holly's statement is normative, but Ben's is positive.
A reduction in the level of unemployment would have which effect with respect to the nation's production possibilities curve?
It would not shift the curve; it would be represented by a movement from a point inside the curve toward a point on the curve
One basic difference between "labor" and "entrepreneur" is that:
Labor is hired by a firm whereas the entrepreneur owns the firm
Which of the following statements is an explanation for the law of increasing opportunity costs?
Many economic resources are better at producing one product rather than another
When a nation is under-allocating resources to the production of a good, then the:
Marginal benefit is greater than the marginal cost of the good
From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have concluded that the:
Marginal cost of waiting is greater than the marginal benefit of being served
Which of the following is not a factor of production?
Money
Which of the following statements pertains to macroeconomics?
National income grew by 2.7 percent last year.
One basic difference between "land" and "capital" resources is that land is:
Natural while capital is man-made
The notion of "purposeful behavior" in the economic perspective suggests that:
One person's choice may differ from another's if their circumstances and information differ
When a state government chooses to build more roads, the resources used are no longer available for public education programs. This dilemma illustrates the concept of:
Opportunity cost
The adage, "There is no such thing as a free lunch," means
People face trade-off
If the marginal benefit of a good is less than its marginal cost, then the nation should:
Reduce the production of that good
The economic perspective focuses largely on marginal analysis, which means analyzing:
The changes in the situation that would result from a given action
Which of the following is considered an economic resource?
The land that is designated as national parks by the government
All of the following would affect the position and shape of a nation's production possibilities curve, except:
The level of unemployment
Mia wants to buy a book. The economic perspective suggests that Mia will buy the book if:
The marginal benefit of the book is greater than its marginal cost
The opportunity cost of doing or getting something is best and fully defined as
The value of the best alternative that is given up in order to do or get something
Microeconomics is concerned with:
a detailed examination of specific economic units that make up the economic system.
Sue drinks three sodas during a particular day. The marginal benefit she enjoys from drinking the third soda
a. can be thought of as the total benefit Sue enjoys by drinking three sodas minus the total benefit she would have enjoyed by drinking just two sodas. B is likely different from the marginal benefit provided to Sue by the second soda. C is likely to continue to fall as Sue drinks more and more soda.
The basic purpose of the ceteris paribus assumption is to:
allow one to reason about the relationship between variables X and Y without the intrusion of variable Z.
Making rational decisions "at the margin" means that people
compare the marginal costs and marginal benefits of each decision.
The economic perspective used in customer decision making at fast-food restaurants is reflected in:
customers selecting the shortest line.
In broad terms the difference between microeconomics and macroeconomics is that
microeconomics studies decisions of individual people and firms and macroeconomics studies the entire national economy.
"Total income and total wealth in the United States economy are unfairly distributed compared to other industrialized countries." This statement would be an example of
normative economic analysis because it requires a subjective judgment.
"Economics is concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity." This statement is:
positive and correct
"Economics is concerned with using scarce productive resources efficiently in attempting to satisfy society's economic wants." This statement is:
positive and correct.
The basic truth that underlies the study of economics is the fact that we all face:
scarcity
The opportunity cost of something you decide to get is
the highest valued alternative you give up to get it.
College athletes who drop out of college to become very successful professional athletes
understand that the opportunity cost of continuing is college is very high for them.