Econ 202 Chapter 1 Homework

Concept of trade-offs: since you increase your purchases of one item,

you must decrease your purchases of the other item

the opportunity cost of an activity is a measure of _______________ when you do that acitivty

what is given up

For a market to be in equilibrium, three conditions must hold.

A) The amount produced by sellers must = the amount purchased by buyers B) The costs of making a product must be less than the final price at which the product sells. C) Buyers must place a value on the uses of the product that is greater than the cost of buying the product.

Comparing a set of feasible alternatives and picking the best one is an optimization process called

cost-benefit analysis

Microeconomics studies

a small piece of the overall economy

The definition of economics states that it is the study of how

agents choose to allocate scarce resources and the impact of those choices on society.

lower infant mortality is _________ and an improvement in nutrition is _____________.

an effect, the cause

policy decisions made by the government are analyzed by

both microeconomics and macroeconomics

empiricism describes a situation where

economists use data to analyze what is happening in the world

Concept of causation

it describes how one event can bring about change in another

a policy such as passing an economic stimulus to spur the economy would be studied under ______________, since it deals with _____________________________.

macroeconomics, the economy as a whole

equilibrium describes a situation where

no one would benefit from changing his or her behavior

The ethical implications of a hotly debated government policy would best be considered a

normative question, since it deals with a subjective issue based on personal preferences.

The statement that the United States should legalize same-sex marriage is a _____________ statement since it describes what people __________.

normative, ought to do

optimization describes a situation where

people weigh costs and benefits when making a decison

The statement that the United States has a budget deficit that is in excess of $15 trillion is a ___________ statement since it describes what people ____________.

positive, actually do

macroeconomics studies

the economy as a whole