Chapter 1
In a modern mixed economy, who decides what goods and services will be produced?
The government, the consumers, and the producers.
Which of the following is a macroeconomics question?
What determines the inflation rate?
Which of the following is a microeconomics question?
What factors determine the price of carrots?
The three fundamental questions that any economy must address are:
What goods and services to produce; how will these goods and services be produced; and who receives them?
The term "market" in economics refers to
a group of buyers and sellers of a product and the arrangement by which they come together to trade.
In economics, the term "equity" means
economic benefits are distributed fairly.
Productive efficiency is achieved when
firms produce goods and services at the lowest cost.
In economics, tangible merchandise is referred to as
goods
All of the following are part of an economic model except
opinions
The highest valued alternative that must be given up to engage in an activity is the definition of
opportunity cost
Who receives the most of what is produced in a market economy?
people who earn the highest incomes
Every society faces economic trade-offs. This means
producing more of one good means less of another good can be produced.
By definition, economics is the study of
the choices people make to attain their goals, given their scarce resources.
Macroeconomics is the study of
the economy as a whole
Marginal analysis involves undertaking an activity
until its marginal benefits equal marginal costs
Which of the following statements is true about profit?
Profit is the difference between revenue and cost.
Which of the following is a positive economic statement?
Scarcity necessitates that people make trade-offs.
In economics, activities done for others, such as providing house cleaning or dental work, are referred to as
Services
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.
What does the term "marginal" mean in economics?
an addition or extra
The revenue received from the sale of ________ of a product is a marginal benefit to the firm.
an additional unit
Economists assume that individuals
are rational and respond to incentives.
Microeconomics is the study of
how households and firms make choices
In economics, the accumulated skills and training that workers have is known as
human capital
Economic models do all of the following except
make economic ideas explicit and concrete for use of decision makers
