eco 231 chapter 1

Identify the main purpose of economic science.

To develop principles by which to rank alternative uses of scarce resources

identify the main purpose of economic science.

To develop principles by which to rank alternative uses of scarce resources

Sally sells a used car to Robert, recognizing that the car has many thousands of miles on it and is likely to need repairs soon. In this scenario, the trade is

beneficial to both Robert and Sally.

The government often uses fiscal policy measures, such as _____, to mitigate economic fluctuations.

changing the tax rates

A diagram can be considered to be a good example of a(n):

economic hypothesis.

The inverse relationship between inflation and unemployment in the short run, called the Phillips Curve, can be seen as an:

example of a macroeconomic policy choice by government.

The government could implement policies that could result in a more equal income distribution. Opponents claim that these policies would:

increase the unemployment rate

The government could implement policies that could result in a more equal income distribution. Opponents claim that these policies would

increase the unemployment rate.

A theater finds that their performances consistently have empty seats in the balcony seats. If the theater owner relies on marginal analysis to evaluate this scenario, she should

lower ticket prices for the balcony seats.

The _____ of a decision is the value of the next best alternative that is foregone.

opportunity cost

_____ is the beginning point of a graph (the 0, 0 point).

origin

Which of the following is a graph whose axes show the quantities of two inputs that can be used to produce some output?

production indifference map

Rational choice requires that the highest valued opportunity that is lost when an individual chooses an action should be

taken into account as a part of the decision-making process.

Analysis of economic theory and policy is difficult because

the available information is usually inadequate and imperfect

Analysis of economic theory and policy is difficult because:

the available information is usually inadequate and imperfect.

France produces both cheese and oysters more efficiently than Spain does. Despite this, it is possible for both countries to benefit from trade in these two goods. The basis for this statement is

the principle of comparative advantage.

If health-care centers in Scotland are unable to fill vacancies for qualified doctors and nurses, it can be said that

the salaries offered by the health-care centers are below the market price.

Tom is a star high school baseball player. If Tom decides to attend college rather than sign a professional baseball contract, his opportunity costs are:

the tuition and fees he will pay, the costs of the books he must purchase plus the extra cost of room and board, plus any income he would receive if he played professional baseball.

According to an economist, the cost-waging war to a society would include

the value of goods and services that are not produced by the soldiers in active military duty.

An appropriate description of the term economic model is that it is a

representation of a theory or a part of a theory.

A contour map illustrates

the way three variables are correlated.

If the government sets a minimum wage that is binding, it is likely that

there will be a surplus of low-skilled workers.

Stuart is trying to determine his opportunity costs of one year of college. Stuart has been accepted in a school that charges $18,000 per year for tuition, $8,000 per year for room and board, and $2,500 per year for books and supplies. Stuart could work in a local restaurant as a waiter and would earn $24,000 per year. If Stuart moves away from home and attends college, his opportunity cost would be:

$52,500

Refer to the following graph (descending). The slope of the line is

-0.5

Which of the following is true of the degree to which minor details can be ignored to understand the functioning of an economy?

-It depends on the objective of the analysis.

If the money supply curve of an economy is depicted as a horizontal line, its slope is

0

A ray through the origin drawn at an angle of 45 degree with the horizontal axis has a slope of

1

Andrea bought a loveseat sofa from Samuel in a garage sale even though it was not in a very good condition. Which of the following is true in this case?

Both Andrea and Samuel have benefitted from the transaction.

Identify the correct statement about the law of comparative advantage.

Free trade is mutually beneficial to both trading countries even if one country has an absolute advantage in all areas of production.

Identify the correct statement about economics.

It is a broad-ranging discipline that focuses on the scarcity of resources and unlimited human wants.

Which of the following is true of an economic theory?

It is a deliberate simplification of factual relationships.

Which of the following is true for a useful economic model?

It may make some unrealistic assumptions in order to simplify a complex reality.

opportunity costs

The _____________ of any decision is the value of the next best alternative that the decision forces the decision maker to forgo.

Tristate Airlines operates a flight between Milwaukee and Chicago that consistently has empty seats. Currently, the airline charges $200 for a one-way ticket on this flight. If the airline decides to offer lower prices at the last minute for these empty seats, what should it charge per ticket given that the extra cost of each passenger is $50 per seat?

above $50.

Ignoring unimportant details in order to understand complex phenomena is a part of:

abstraction

Identify the correct statement about economics. It is only concerned with the consumer demand pattern of an economy.

it is a broad-ranging discipline that focuses on the scarcity of resources and unlimited human wants.

Which of the following is true of an economic theory?

it is a deliberate simplification of factual relationships.

Refer to the following graph. Curve A has a slope _____; the slope of curve B is

of 1; different at different points

Which of the following is an example of an externality?

The loud music playing on your neighbor's stereo

correlation

Two variables are said to be correlated if they tend to go up or down together. _________ need not imply causation.

If variable X is measured on the horizontal axis and Y on the vertical axis, then _____ is the equation of a straight line that has a slope of zero at all points.

Y=a

abstract

_________ means ignoring many details so as to focus on the most important elements of a problem.

abstraction

_________ means ignoring many details so as to focus on the most important elements of a problem.

theory

a __________ is a deliberate simplification of relationships used to explain how those relationships work.

During Thanksgiving, American Airlines experiences an increase in the sale of flight tickets. The relationship between Thanksgiving and air travel can be shown by

a curve with a positive slope

in the short run, an increase in the unemployment rate is likely to be accompanied by:

a decrease in the inflation rate

economic model

an ________________ is a simplified, small-scale version of an aspect of the economy. Economic models are often expressed in equations, by graphs, or in words.

During the winter of 1999, road accidents occurred every Friday night in a suburb of Oklahoma. Citizens assumed Fridays cause accidents. This hypothesis is an example of

an assumption that correlation implies causation.

During the winter of 1999, road accidents occurred every Friday night in a suburb of Oklahoma. Citizens assumed Fridays cause accidents. This hypothesis is an example of:

an assumption that correlation implies causation.

A theory can best be defined as:

an explanation of mechanisms behind observed phenomena

Theory can be best defined as

an explanation of mechanisms behind observed phenomena

Warren could paint one car in two hours before he bought a car spray painting machine. Now, he can paint one car in an hour. This is an example of

an increase in labor productivity.

A sports fan eats a spaghetti dinner just prior to watching his favorite team win a big game. He does this again prior to the next game and his team wins again. He eats a sandwich right before the third game that his team plays and loses the game. The sports fan concludes that for his team to win he must eat a spaghetti dinner. His hypothesis

assumes that correlation implies causation.