Ch. 1 Micro

Trade-offs force society to make​ choices, particularly when answering the following three fundamental​ questions: A. ​One, what goods and services will be​ produced? Two, how will the goods and services be​ produced? Three, who will receive the goods and services​ produced? B. ​One, what goods and services will be produced in foreign​ countries? Two, who will produce the goods and​ services? Three, who will receive the goods and services​ produced? C. ​One, what goods and services will be​ produced? Two, how will the goods and services be​ produced? Three, is the distribution of goods and services​ fair? D. ​One, what goods and services will be produced​ domestically? Two, how will the goods and services be​ produced? Three, is the distribution of goods and services​ fair?

A. ​One, what goods and services will be​ produced? Two, how will the goods and services be​ produced? Three, who will receive the goods and services​ produced?

Microeconomics is the study of A. firms as individual units excluding how these firms interact with one another. B. how households and firms make​ choices, how they interact in​ markets, and how the government attempts to influence their choices. C. the economy as a​ whole, including topics such as​ inflation, unemployment, and economic growth. D. ​"small" (less than​ $100,000) economic transactions in the economy.

B. how households and firms make​ choices, how they interact in​ markets, and how the government attempts to influence their choices.

Firms choose how to produce the goods and services they sell. In many​ cases, firms face a​ trade-off between using more workers or using more machines. For​ example, A. a local service station has to choose whether to provide car repair services using more diagnostic computers to support their auto mechanics and fewer tools to support their auto mechanics or more tools to support their auto mechanics and fewer diagnostic computers to support their auto mechanics. B. many times in the past several​ decades, firms may have chosen between a production method in the United States that uses fewer workers and more machines and a production method in China that uses more workers and fewer machines. C. many times in the past several​ decades, firms may have chosen between a production method in the United States that uses fewer machines and more workers and a production method in China that uses more machines and fewer workers. D. movie studios have to choose whether to produce animated films using more highly skilled animators to draw them by hand or fewer highly skilled animators and more​ low-skill animators.

B. many times in the past several​ decades, firms may have chosen between a production method in the United States that uses fewer workers and more machines and a production method in China that uses more workers and fewer machines.

The diagram to the right illustrates a very important relationship in economics between two​ variables: the price of a good and the quantity demanded of that good. The two variables in this diagram​ are: A. price​ (dollars per​ bushel) on the horizontal axis and quantity​ (bushels per​ week) on the vertical axis. B. price​ (dollars per​ bushel) on the vertical axis and quantity​ (bushels per​ week) on the horizontal axis. C. price​ (bushels per​ week) on the vertical axis and quantity​ (dollars per​ bushel) on the horizontal axis. D. none of the above.

B. price​ (dollars per​ bushel) on the vertical axis and quantity​ (bushels per​ week) on the horizontal axis.

One of the basic facts of life is that people must make choices as they try to attain their goals. This unavoidable fact comes from a reality an economist calls A. the market. B. scarcity. C. economics. D. rationality.

B. Scarcity

Which of the following covers the study of topics such as inflation or​ unemployment? A. Microeconomics B. Macroeconomics C. Both microeconomics and macroeconomics give equal emphasis to these problems. D. None of the above.

B. macroeconomics

Macroeconomics is A. the study of how households and firms make​ choices, how they interact in​ markets, and how the government attempts to influence their choices. B. the study of​ "large" (greater than​ $100,000) economic transactions in the economy. C. the study of the economy as a​ whole, including topics such as​ inflation, unemployment, and economic growth. D. the study of firms as a group with special emphasis on how these firms interact with one another.

C. the study of the economy as a​ whole, including topics such as​ inflation, unemployment, and economic growth.

Any model is based on making assumptions because A. models have to be simplified to be useful. B. we cannot analyze an economic issue unless we reduce its complexity. C. both a and b. D. neither a nor b.

C. Both a and b

When we graph the relationship between two​ variables, we often want to draw conclusions about whether changes in one variable are causing changes in the other variable. Doing​ so, however, can lead to incorrect conclusions. Reasons for drawing incorrect conclusions about cause and effect include A. an omitted variable. B. reverse causality. C. both a and b. D. none of the above.

C. a and b

When the federal government crafts environmental policies that make it less expensive for firms to follow green​ initiatives, A. the policies are futile because where the environment is​ concerned, it has been repeatedly shown that firms do not respond to economic incentives. B. the policies are likely to be more successful than policies that cost firms​ more, but they do not recognize economic incentives. C. the policies are consistent with economic incentives. D. pollution is likely to increase.

C. the policies are consistent with economic incentive

osoft charges a price of​ $599 for a copy of Windows 7. Is this pricing decision​ rational? A. We cannot assume that this pricing decision was rational because we do not have enough information to make an assumption. B. ​Microsoft's choice cannot be​ rational: the price is clearly more than most people are willing and able to pay. C. ​Microsoft's choice was​ rational: the price will maximize profit. D. When we assume the managers at Microsoft have used all available information and have weighed all known benefits and​ costs, we are assuming rationality.

D. When we assume the managers at Microsoft have used all available information and have weighed all known benefits and​ costs, we are assuming rationality.

Opportunity cost is A. when consumers and firms use all available information as they act to achieve their goals. B. the idea that because of​ scarcity, producing more of one good or service means producing less of another good or service. C. when unlimited wants exceed the limited resources available to fulfill those wants. D. the highest valued alternative that must be given up to engage in an activity.

D. the highest valued alternative that must be given up to engage in an activity.

A hypothesis in an economic model is A. tested before it can be accepted​ (or not​ rejected). B. usually about a causal relationship. C. a statement that may be either correct or incorrect about an economic variable. D. all of the above.

D. All of the Above

Economics is a social science because A. it applies the scientific method to the study of the interactions among individuals. B. it considers human behaviorlong dashparticularly ​decision-making behavior. C. it is based on studying the actions of individuals. D. all of the above.

D. All of the above

Economists use the word marginal to mean an extra or additional benefit or cost of a decision. An optimal decision occurs when A. marginal cost is zero. B. marginal benefit is maximized. C. marginal benefit is greater than marginal cost. D. marginal benefit equals marginal cost.

D. Marginal Benefit equals marginal cost