Chapter 1-3 Pearson Dynamic Study Set
An electric power producer generates an external cost by emitting high levels of pollutants when it uses coal to generate power. The presence of this externality leads to:
overproduction
Whenever markets do not produce the most efficient outcomes on their own, we call this phenomenon:
market failure
What is the percentage change in price for a shirt that was marked down from $40 to $28?
-30%
Graphs are often used in economics because they
can simply complex topics
The stock of computers, factory buildings and machine tools used to produce goods is known as
physical capital
Economics is the study of choice under conditions of
scarcity
Macroeconomics is concerned with all of the following except:
unemployment rates, A: political part affiliation, standard of living, inflation rates
The principle of diminishing returns applies
when at least one input is fixed
When is output lower than the efficient level?
when marginal benefit is greater than marginal cost
When is output higher than the efficient level?
when marginal benefit is less that marginal cost
The vertical axis on a graph is also known as the
y-axis
When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?
A market
Macroeconomics can be used to understand all of the topics listed below, except
A: how a consumer decides between the purchase of two different cars, what causes economic booms and recessions, national unemployment trends, how the national economy works
Countries gain from specializing in producing goods in which they have a(n) __________ advantage and trading for goods in which other countries have a(n) __________ advantage.
Comparative, comparative
Which of these government policies can help economic growth?
Ensuring political stability and relatively little corruption
Economic decisions are made at every level in society. When we try to decide which production method to use among several alternatives, which of the following key economic questions are we trying to answer
How do we produce products
Which of the following are not essential components of an economic model?
Hypotheses, Variables, Assumptions, A: Normative Statements
Economics
Is concerned with how people respond to incentives.
The resources provided by nature and used to produce goods and services are also known as:
Natural Resources
occurs when a domestic firm shifts production to a different country.
Outsourcing
Which of these is NOT a source of market failure?
Perfect competition
In a market system, which of the following provides the information that individuals need to make decisions about resource allocation?
Prices
Understanding economics can help policymakers devise strategies to do all of the following excep
Reduce Poverty Levels, increase our standard of living, A: eliminate climate change, encourage business formation
In his 1776 book, "An Inquiry into the Nature and Causes of the Wealth of Nations," Adam Smith notes that specialization increases productivity. Which of the following was the cause of this phenomenon?
The division of labor
Marlene decided to close down her retail clothing store and go back to work for a large corporation, even though she was making an accounting profit. Her decision was based on the fact that she would make more money in her old job than she was making in the retail clothing store. Marlene's decision factored in:
The opportunity cost of lost wages from keeping her store open.
The slope of a straight line equals the change in the value on the __________ axis __________ by the change in the value of the other axis measured between any two points on the line.
Vertical, Divided
Which of the following is a positive economic statement
We should tax the wealthy more and use the money to provide services for the poor, the government should do something to help the homeless, full employment polices should be pursued, A if minimum wages rise then the unemployment will rise
You and your neighbor pick apples and cherries. If you can pick apples at a lower opportunity cost than your neighbor can, which of the following is true?
You have a comparative advantage in picking apples.
If the president of Columbia commented that "we should do something to reduce inflation in Columbia," this would be an example of
a normative statement
The ability of an individual, firm, or country to produce more of a good or service than competitors using the same amount of resources is known as:
absolute advantage
According to the theory of comparative advantage, specialization and free trade will benefit:
all trading partners who specialize in goods where they have comparative advantage
Ms. Boulware is the best lawyer and the best secretary in town. She has:
an absolute advantage in both jobs
A product produced in a foreign country and purchased by residents of the home country is called:
an import
In what type of economy does the government decide how economic resources will be allocated?
centrally planned economy
In what type of economy does the government decide how most economic resources will be allocated?
centrally planned economy
Economic models often simplify the real world by holding all things equal and changing one variable to determine the impact of the change. The "all things equal" assumption is also known as
ceteries paribus
If your nominal wages increased by 10% and inflation was 15%, your real wage;
decreased
One of the first steps in deciding whether to complete your education is to:
evaluate the marginal cost and marginal benifit
Goods and services produced domestically but sold to other countries are called __________.
exports
A patent is government protection that gives an inventor exclusive rights to profit from their invention __________.
for a period of 20 years
Social security payments are indexed to inflation so that recipients can
maintain their purchasing power
Decision analysis that involves comparing marginal costs and marginal benefits to determine the best course of action is known as
marginal analysis
The additional benefit resulting from a small increase in some activity is called the;
marginal benefit
The optimal economic decision is to continue any activity, investing or otherwise, up to the point where:
marginal benefit equals marginal cost
Economic variables that are calculated in current year prices are referred to as __________ variables, while variables that have been corrected to account for the effects of inflation are __________ variables.
nominal, real
What is the name given to the highest-valued alternative that must be given up to engage in any activity?
opportunity cost
Which of the following is known as the highest-valued alternative that must be given up in order to engage in an activity?
opportunity cost
When nations specialize in their comparative advantage and engage in trade:
overall standards of living increase
Absolute advantage is the ability of an individual, firm, or country to:
produce more of a good or service than competitors using the same amount of resources
The principle of opportunity cost evolves from the concept of
scarcity
Economic models are
simplifications of reality that focus only on key relationships and ignore less relevant details.
The role of the entrepreneur always involves:
taking risks
Which of the following is not a possible opportunity cost of attending college?
the cost of housing
Contracts, insurance, patents and accounting rules are:
inventions that make a market work better
If a country has a comparative advantage in the production of a good, then that country:
has a lower opportunity cost in the production of that good
The lowest amount a firm is legally allowed to pay an employee is known as the __________.
minimum wage