Economics Chapter 1

A hypothesis is an economic model is

All of the above

When we graph the relationship between two​ variables, we often want to draw conclusions about whether changes in one variable are causing changes in the other variable. Doing​ so, however, can lead to incorrect conclusions. Reasons for drawing incorrect conclusions about cause and effect include

Both Omitted Variable and Reverse Causality

A market is a group of Blank. of a good or service and the institution or arrangement by which they come together to trade.

Buyers and sellers

Societies organize their economics in 2 main ways to answer the three questions of what, how and who. A society can have a Blank. economy in which the government decides how economic resources will be allocated. Or a Blank. society can have a economy in which the decisions of households and firms interacting in markets allocate economic resources

Centrally Planned Market

BLANK decide what goods and services will be produced

Consumers, Firms and Government

Blank..... is the study of the choices of people make to attain their goals, given scarce resources

Economics

In the United States, who receives the goods and services produced depends largely on Blank.

How income is distributed

Which of the following covers the study of topics such as inflation or unemployment?

Macroeconomics

Economists use the word (marginal) to mean an extra or additional benefit or cost of a decision. An optimal decision occurs when

Marginal benefit equal marginal cost

A economy is an Blank. economy in which most economic decisions result from the interaction buyers and sellers in markets but in which the government plays a significant role in the allocation of resources.

Mixed

Blank occurs when a good or service is produced at the lowest possible cost. Blank occurs when production is in accordance with consumer preference

Productive Efficiency Allocative Efficiency

Equity is

The fair distribution of economic benefits

When the federal government crafts environmental policies that make it less expensive for firms to follow green​ initiatives

The policies are consistent with economic incentives

Microeconomics is the study of

how households and firms make choices how they interact in markets and how the government attempts to influence their choices

Any model is based on making assumptions because

models have to be simplified to be useful and we cannot analyze an economic issue unless we reduce its complexity

Macroeconomics is

the study of the economy as a whole, including topics such as inflation, unemployment, and economic growth