Chapter 1 Microeconomics

Which one of the following best characterizes the "other-things-equal" assumption? Multiple choice question. Those variables under immediate consideration for a particular analysis are given equal weight. All variables are held constant or do not change for a particular analysis. Those variables under immediate consideration for a particular analysis are all held constant. All variables except those under immediate consideration are held constant for a particular analysis.

All variables except those under immediate consideration are held constant for a particular analysis.

Taken together, the four general categories of economic resources (land, labor, capital, and entrepreneurial ability) are referred to as which of the following? Multiple choice question. Other-things-equal assumption Economizing problem Factors of production Opportunity cost

Factors of production

True or false: Economists use the terms "capital" and "money" interchangeably.

False

True or false: Everyone except for the super wealthy has a finite, or limited, amount of income. True false question.

False

______ comes in the form of wages, interest, rent, profit, and even from government programs. Multiple choice question. Transfers Taxes Income Spending

Income

What do economists call the physical actions and mental activities that people contribute to the production of goods and services? Multiple choice question. Investment Entrepreneurial ability Capital Labor

Labor

Which discipline studies the economy as a whole or its basic subdivisions or aggregates? Multiple choice question. Normative economics Positive economics Macroeconomics Microeconomics

Macroeconomics

Which of the following resources would be considered to be land by an economist? Multiple select question. Forests Oil and mineral deposits Arable land Water Factories

Forests Oil and mineral deposits Arable land Water

Which of the following is true of positive economics? Multiple select question. It avoids value judgments. It deals with what the economy should be like. It focuses on facts and cause-and-effect relationships. It focuses on value judgments. It tries to establish scientific statements about economic behavior.

It avoids value judgments. It focuses on facts and cause-and-effect relationships. It tries to establish scientific statements about economic behavior.

As more and more of a particular good is produced, which of the following rises? Multiple choice question. Opportunity costs Marginal revenue Unemployment Profits

Opportunity costs

All natural resources, human resources, and manufactured goods that go into the production of goods and services are considered as society's scarce ______ resources.

economic

A statement about economic behavior or the economy that enables prediction of the probable effects of certain actions is known as a(n) ______. Multiple choice question. real-world outcome economic principle normative economic statement economic hypothesis

economic principle

Economists do not include money as an economic resource because ______. Multiple choice question. the value of money is constantly fluctuating of its difficulty in valuating due to many world currencies currency and coins are easily lost or destroyed money produces nothing

money produces nothing

A production possibilities curve (PPC) illustrates the attainable combination ______, Multiple choice question. of many goods that can be produced given an unlimited amount of resources of two goods that can be produced given an unlimited amount of resources of two goods that can be produced given a specific set of resources of two goods that can be produced given a limited amount of income

of two goods that can be produced given a specific set of resources

Due to scarce resources, society is faced with a(n) ______ cost when choosing to acquire a good by sacrificing the next best thing that could have been acquired with those resources. Multiple choice question. opportunity marginal explicit utility

opportunity

Points lying ______ the production possibilities curve represent greater, but unachievable levels of output with current inputs, than that at any point on the curve. Multiple choice question. inside at the axis of midpoint of along outside

outside

Unemployment in the economy is graphically represented by ______ the production possibilities curve. Multiple choice question. a rightward shift of a movement outside a change to a new point on points inside

points inside

The outward bowing shape of the production possibilities curve is due to ______. Multiple choice question. the diminishing marginal benefits the law of increasing opportunity costs the law of decreasing opportunity costs the law of diminishing marginal utility

the law of increasing opportunity costs

The optimal allocation of resources occurs when ______. Multiple choice question. the marginal benefit of the good is greater than the marginal cost the marginal cost of producing the good is equal to zero the marginal benefit of the good equals the marginal cost the production of the two goods is equal

the marginal benefit of the good equals the marginal cost

The concept at the core of economics that "there is no free lunch" reflects the notion that ______. Multiple choice question. the scarce resources that are used to produce the so-called "free goods" have alternative uses that are given up the benefit of certain "free" goods only accrues to society unlimited resources are used to produce so-called "free goods" even if your friend pays for your lunch, you'll have to repay the favor at a later time

the scarce resources that are used to produce the so-called "free goods" have alternative uses that are given up

Which of the following occurs when limited economic resources are used to produce one type of good instead of another? Multiple select question. There is an opportunity cost. There is no cost borne by society in utilizing these resources to produce goods or services. There is a cost borne by society in utilizing these resources in lieu of the next best thing. There is no opportunity cost.

There is an opportunity cost. There is a cost borne by society in utilizing these resources in lieu of the next best thing.

For economists, ______ goods include all manufactured aids used in producing consumer goods and services. Multiple choice question. entrepreneurial capital consumer labor

capital

A production possibilities table illustrates that at any point in time ______. Multiple choice question. a fully employed economy assumes a fixed availability of income an economy operating at less than full employment operates on its production possibilities curve a fully employed economy must sacrifice some amount of one good to obtain more of another good a fully employed economy is always producing below its production possibilities

a fully employed economy must sacrifice some amount of one good to obtain more of another good

A production possibilities table illustrates that at any point in time ______. Multiple choice question. a fully employed economy is always producing below its production possibilities an economy operating at less than full employment operates on its production possibilities curve a fully employed economy assumes a fixed availability of income a fully employed economy must sacrifice some amount of one good to obtain more of another good

a fully employed economy must sacrifice some amount of one good to obtain more of another good

Suppose you are given a $100 gift card and you choose to spend it on a number of goods. You will select a combination of goods that is best for you and that maximizes your satisfaction. Your choices will involve which of the following? Multiple choice question. The available supply of each good considered A decision between attainable and unattainable combinations of the goods under consideration A comparison of marginal benefits and marginal costs for each good considered An evaluation of the unlimited resources used in the production of each good considered

A comparison of marginal benefits and marginal costs for each good considered

Which of the following describes a budget line? A curve showing various combinations of three or more products a consumer can purchase at different prices. A curve showing various combinations of two products a consumer can purchase with a specific amount of income. A curve showing various combinations of two products an economy can produce with a specific amount of resources. A schedule showing various combinations of three or more products a consumer can purchase at different prices.

A curve showing various combinations of two products a consumer can purchase with a specific amount of income.

A point that lies inside the production possibilities curve reflects which of the following? Multiple choice question. A failure to achieve full employment Too many resources being allocated to the production of one good An efficient use of resources Unattainable combinations of output

A failure to achieve full employment

Which of the following illustrates that at any point in time, a fully employed economy must sacrifice some amount of one good to obtain more of another good? Multiple choice question. An opportunity cost curve Macroeconomics Marginal analysis A production possibilities table

A production possibilities table

Which of the following illustrates that at any point in time, a fully employed economy must sacrifice some amount of one good to obtain more of another good? Multiple choice question. Macroeconomics A production possibilities table Marginal analysis An opportunity cost curve

A production possibilities table

Which of the following statements or questions exemplify positive economics? Multiple select question. Should the unemployment rate in the United States be lower than in Mexico? As flight ticket prices fall, airlines experience an increase in revenue. When the government increases the minimum wage, the unemployment rate rises. The unemployment rate in Mexico is higher than that in the United States. The government ought to increase the minimum wage so that incomes rise.

As flight ticket prices fall, airlines experience an increase in revenue. When the government increases the minimum wage, the unemployment rate rises. The unemployment rate in Mexico is higher than that in the United States.

Which of the following are illustrated by the following figure? (Check all that apply.) Multiple select question. As one moves to the right and produces more pizzas, the number of robots that must be given up remains constant. The resources used to produce industrial robots and pizzas are perfectly flexible and interchangeable. As one moves to the right and produces more pizzas, the number of robots that must be given up rises. The resources used to produce industrial robots and pizzas are not perfectly flexible and interchangeable.

As one moves to the right and produces more pizzas, the number of robots that must be given up rises. The resources used to produce industrial robots and pizzas are not perfectly flexible and interchangeable.

Which of the following are ways of expressing the meaning of ceteris paribus? (Check all that apply.) Multiple select question. Assuming additional factors, other than those under consideration, play a significant role in analysis Assuming factors other than those being considered in a particular analysis do not change Assuming additional factors, other than those under consideration, are given equal consideration Assuming other things are equal

Assuming factors other than those being considered in a particular analysis do not change Assuming other things are equal

Which of the following are general categories economists use to classify economic resources? Multiple select question. Money Capital Land Entrepreneurial ability Labor

Capital Land Entrepreneurial ability Labor

In which of the following ways do capital goods differ from consumer goods? Multiple select question. Capital goods satisfy consumer wants indirectly by facilitating the production of consumer goods. Capital goods increase the demand for consumer goods. Consumer goods satisfy wants indirectly. Consumer goods satisfy wants directly.

Capital goods satisfy consumer wants indirectly by facilitating the production of consumer goods. Consumer goods satisfy wants directly.

Which of the following are the focus of positive economics? Multiple select question. Cause-and-effect relationships Idealized situations How economies ought to function Facts

Cause-and-effect relationships Facts

If economists examine the relationship between the price of a good and sales of that good while ignoring other related factors, or assuming those other factors are equal, they are using which of the following? Multiple choice question. Ceteris paribus Scarcity theory The scientific method Marginal costs

Ceteris paribus

Which of the following combinations are unattainable given a consumer's budget line? Multiple choice question. Combinations that fall on the budget line A combination that intersects either of the axes Combinations that fall inside the budget line Combinations that fall beyond the budget line

Combinations that fall beyond the budget line

Which of the following combinations are attainable given a consumer's budget line? Multiple select question. Combinations that fall inside the budget line Combinations that fall beyond the budget line Combinations falling only on the Y-axis Combinations that fall on the budget line

Combinations that fall inside the budget line Combinations that fall on the budget line

______ goods satisfy wants directly, whereas ______ goods do so indirectly.

Consumer; capital

An entrepreneur does which of the following? Multiple select question. Makes strategic business decisions that set the course of an enterprise Passes risks on to shareholders Takes the risk of commercializing new products Innovates Looks for new products to copy

Makes strategic business decisions that set the course of an enterprise Takes the risk of commercializing new products Innovates

Which discipline studies the decision-making process of customers, workers, households, and business firms on an individual basis rather than as aggregates? Multiple choice question. Negative economics Microeconomics Macroeconomics Positive economics

Microeconomics

______ economics considers the desirability of certain aspects of the economy and underlies expressions of support for particular economic policies. Multiple choice question. Positive Microeconomics Macroeconomics Normative

Normative

Which of the following illustrates the attainable combination of two goods that can be produced given a specific set of resources? Multiple choice question. Opportunity cost Production possibilities curve Budget constraint Demand and supply curve model Budget line

Production possibilities curve

What is the cause of a society's increasing opportunity costs with respect to the production of goods? Multiple choice question. Resources that are not fully interchangeable Resources that are perfectly flexible Budget line constraints A society's unlimited wants

Resources that are not fully interchangeable

______ economic resources means limited goods and services. Multiple choice question. Scarce Physical Tangible Insatiable

Scarce

Marginal analysis involves the evaluation of which of the following? Multiple choice question. The total costs versus marginal costs of a decision The marginal benefits and total benefits of a decision The additional cost versus the additional benefit of a decision The total costs versus total benefits of a decision

The additional cost versus the additional benefit of a decision

Which of the following are issues most explored in microeconomics? Multiple select question. The expenditures of a government entity Measuring the price of specific goods Measuring total revenues of a firm Unemployment and inflation rates The level of public debt

The expenditures of a government entity Measuring the price of specific goods Measuring total revenues of a firm

A production possibilities curve with an increasing slope is the result of which of the following? Multiple choice question. The law of increasing opportunity costs The other-things-equal assumption The scarcity of resources The economizing problem

The law of increasing opportunity costs

A production possibilities curve with an increasing slope is the result of which of the following? Multiple choice question. The scarcity of resources The other-things-equal assumption The economizing problem The law of increasing opportunity costs

The law of increasing opportunity costs

An economy can produce either guns or butter with all available resources. Suppose it currently produces all butter and it chooses to produce some guns, thereby giving up some production of butter. As a result, the first 200 units of guns are produced at the cost of only 50 units of butter. Not surprisingly, the next 200 units of guns are produced at the cost of 150 units of butter and the last 200 units of guns at the cost of 300 units of butter. What does this describe? Multiple choice question. The law of increasing opportunity costs. The law of equal opportunity costs. The notion that the production between guns and butter is a 1 to 1 ratio. The law of decreasing opportunity costs.

The law of increasing opportunity costs.

Which concepts or terms refer to the notion that all variables except those under immediate consideration are held constant for a particular analysis? (Check all that apply.) Multiple select question. The generalizations assumption The other-things-equal assumption The scientific method Ceteris paribus

The other-things-equal assumption Ceteris paribus

Which best defines utility? The satisfaction or pleasure obtained from producing a good or service The satisfaction or pleasure obtained from consuming a good or service The utilization of economic resources by consumers when engaging in consumption The utilization of economic resources by producers when engaging in production

The satisfaction or pleasure obtained from consuming a good or service

What are the functions of an entrepreneur? Multiple select question. To maximize the welfare of society To combine the resources of land, labor and capital to produce a good or service To make strategic business decisions To avoid risks and prevent the commercialization of new products and ideas

To combine the resources of land, labor and capital to produce a good or service To make strategic business decisions

True or false: A trade-off occurs when some quantity of production of a good is given up in order to produce another good. True false question.

True

The highest-valued alternative that is given up or sacrificed when choosing to produce or consume one good over another is referred to as ______. Multiple choice question. a variable cost a fixed cost an opportunity cost an economic choice

an opportunity cost

Normative economics is ______. Multiple choice question. based on value judgments based on facts applicable only to macroeconomics based on the use of the scientific method

based on value judgments

A consumer's ______ line or constraint shows various combinations of two products that can be purchased with a specific amount of income. (Enter one word in the blank.)

budget

Factories, storage, transportation, and machinery are all examples of ______ goods. Multiple choice question. labor land entrepreneurial ability capital

capital

What is the simplified term economists use to refer to "factors of production"? Multiple choice question. investment capital goods inputs outputs

inputs

A manufacturing firm builds a new warehouse to expand its inventory capacity. Economists refer to this activity as ______. Multiple choice question. investment labor entrepreneurial ability consumer production

investment

In economics, the term ______ describes spending that pays for the production and accumulation of capital goods. Multiple choice question. investment money capital entrepreneurship

investment

The work-related activities of a teacher and doctor fall under the resource category of ______ .

labor

From an economic standpoint, ______ includes all natural resources used in the production process. Multiple choice question. capital labor land supply

land

In economics, what term is used to mean "extra," "additional," or "a change in"? Multiple choice question. profit utility marginal deficient

marginal

In developing economic theories, principles, or models, economists ______. Multiple choice question. remove clutter and simplify ignore possible variables include all possible factors consider every possible outcome

remove clutter and simplify

Arable land, water, machinery, and professional athletes are all considered economic ______ used in the production of goods and services.

resources

When an economy produces a good such that the marginal benefit equals the marginal cost, this indicates that ______. Multiple choice question. resources are being allocated efficiently the unemployment rate is at its minimum society's well-being would increase by decreasing the output of the good society would be better off by increasing the output of the good

resources are being allocated efficiently

Scarcity of economic resources _____. Multiple choice question. results in deflation results in poverty and unequal distribution of wealth restricts options and demands choices leads to the production of unlimited goods and services

restricts options and demands choices

Land and mineral resources, transportation and communication facilities, factories and farm buildings, equipment, tools and machinery are all examples of _______. Multiple choice question. scarce economic resources economic growth insatiable wants unlimited economic resources

scarce economic resources

An increase in income will ______. Multiple choice question. shift the budget line to the right cause a movement up the budget line shift the budget line to the left cause a movement down the budget line

shift the budget line to the right

In this figure, obtaining more books by giving up some movies is called a(n) ______; whereas losing two books in order to gain 1 movie is referred to as ______ cost. Multiple choice question. budget; a production opportunity; trade-off trade-off; an opportunity trade-off; a production

trade-off; an opportunity

People desire goods and services that provide maximum utility. In fact, our desires or wants are ______. Multiple choice question. unlimited supply-driven reasonable limited

unlimited

The pleasure, satisfaction, or happiness obtained from consuming a good or service is known as ______.

utility

For better or worse, people have ______. Multiple choice question. extremely limited desires few unsatisfied wants virtually unlimited income virtually unlimited wants

virtually unlimited wants

Positive economics is concerned with ______, whereas normative economics deals with _____. Multiple choice question. what is; what should be what should be; what is value judgments; factual statements opinions; facts

what is; what should be

Because consumers behave in a rationally self-interested manner, the consumer will purchase a good or service ______. Multiple choice question. by examining only marginal costs when the marginal benefit is greater than the marginal cost when opportunity costs are greater than marginal benefits by examining only marginal benefits

when the marginal benefit is greater than the marginal cost