Homework 1

According to the rationality assumption, people:

Do not intentionally make decisions that would leave them worse off

Economists believe that an individual or firm should continue any activity until:

MB=MC

In what type of economy does the government decide how economic resources will be allocated?

a centrally planned economy

When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?

a market

__________ goods and services are those bought by businesses to be used to increase efficiency or enhance production.

capital

One of the first steps in deciding whether to complete your education is to:

evaluate the marginal cost and marginal benefit of that decision

Tangible products like cars and televisions are referred to as:

goods

Macroeconomics can be used to understand all of the topics listed below, except:

how a consumer decides between the purchase of two different cars

which of the following is a positive economic statement?

if minimum wage rates rise, then unemployment will rise Positive economic statements are statements of fact that imply no value judgment. Notice that the correct response merely stated what would happen if minimum wage went up and made no statement about whether that was good or bad. The other responses all imply value by using the word 'should.' If we 'should' do something we are implying that is a good outcome and something we need to pursue.)

The united states is best classified as a:

mixed ecomony

The resources provided by nature and used to produce goods and services are also known as:

natural resources

Jim declined to take part in a health study on a free basis but changed his mind after being offered $1,000 to participate in the study. Jim's behavior best illustrates which economic principle?

people respond to economic incentives

Macroeconomics is concerned with all of the following except

political party affiliations

Economics is the study of choice under conditions of:

scarcity

Which of the following is not a possible opportunity cost of attending college?

the cost of housing

Economic decisions are made at every level in society. When we try to decide which production method to use among several alternatives, which of the following key economic questions are we trying to answer?

How do we produce the products?

Which of the following countries has an economy where most of the resource allocation is determined by a central planning authority?

North Korea

What is the name given to the development of a new good?

invention

Economics:

is concerned with how people respond to incentives

The stock of computers, factory buildings and machine tools used to produce goods is known as:

physical capital

The principle of opportunity cost evolves from the concept of:

scarcity