Economics CH1
Although water is very abundant in most places, it is scarce because:
it has two or more alternative uses
Making choices that are expected to achieve the highest possible value for some objective is termed:
maximizing
Economists concerned about the behavior of individual households, firms, and industries are studying:
microeconomics
A simplified representation of a particular problem is a:
model
The current rate of unemployment of 5 percent is too high. This is a _______ statement.
normative
Economists are:
not always in agreement on the best way to implement policy decisions
The current rate of unemployment is 5 percent. This statement:
positive
A systematic set of procedures through which knowledge is created is:
the scientific method
A(n) _______ does not pose the problem of scarcity; one use of the good is not an alternative to another use.
free good
A scarce resource is one that:
has alternative uses
The "all other things unchanged" assumption is useful because it:
helps to restrict analysis to the effect of a single economic factor
An answer to the question "How are goods produced?" determines:
how resources are combined in the production of goods
The "all other things unchanged" assumption is used to:
simplify the very complex real world
According to the textbook, economics is a:
social science
Economics is a:
social science that deals with making choices among alternatives
Positive statements are:
statements that can be tested
Macroeconomics deals with:
the analysis of the aggregate values in the economy
The economic way of thinking includes:
the assumption that individuals choose to maximize some objective
Whenever a choice is made:
the cost of that choice could be referred to as opportunity cost
Reaching the incorrect conclusion that one event causes another because the events tend to occur together is called:
the fallacy of false cause
The three fundamental economic questions of what, how, and for whom:
exist because of scarcity
The problem of determining what goods and services society should produce:
exists because there are not enough resources to provide all the goods and services that people want to purchase
Scarcity exists when:
a choice must be made among two or more alternatives
The statement that "there is no such thing as a free lunch" means:
any production requires the use of scarce resources, and thus the sacrifice of another alternative
The economic way of thinking includes:
attention paid to the opportunity costs involved in any choice
Something whose value does not change is a:
constant
The scientific method is more difficult for economists than, say, chemists, because:
controlled laboratory conditions are more problematic in economicsm; it is difficult to hold other factors that may affect the variables being studied constant in economics; economic conditions may change quickly and unexpectedly.
In economics, the function of theories, laws, and hypotheses is to:
discover relationships between events that are important to economic behavior
The economic way of thinking includes:
emphasis on how choices are made at the margin
A variable that induces a change in another variable is a(n):
independent variable
Microeconomics deals with:
individual units in the economy
A theory that has won virtually universal acceptance is a:
law
The branch of economics that examines the impact of choices on aggregates in the economy is:
macroeconomics
