Limits, Alternatives and Choices

Which of the following statements or questions exemplify normative economics? When the price of gas rises, the quantity consumed falls. What will be the result of a Continental Airlines and United Airlines merger? The government ought to bail out distressed banks. What should the Federal minimum wage be? Cable companies should merge because they result in a more competitive pricing. The government should increase the minimum wage.

The government ought to bail out distressed banks. What should the Federal minimum wage be? Cable companies should merge because they result in a more competitive pricing. The government should increase the minimum wage.

Which of the following results from having scarce economic resources? Poverty and unequal distribution of wealth Inflation The production of limited goods and services The production of unlimited goods and services Deflation

The production of limited goods and services

Utility is defined as:

The satisfaction or pleasure obtained by consumers from consuming a good of service.

Which of the following exemplifies that topics and subdivisions of economics can be rooted in both Macroeconomics and Microeconomics? The unemployment rate and the decisions by government to foster economic growth through job creation. The unemployment rate and the decisions of individual firms and workers to encourage or impede hiring, as well as to search for work, respectively. The unemployment rate and the decisions by government to offer tax and credit incentives to producers as a means to create job growth. The unemployment rate and the labor force rate.

The unemployment rate and the decisions of individual firms and workers to encourage or impede hiring, as well as to search for work, respectively.

Which of the following statements or questions exemplify positive economics? Should the unemployment rate in the United States be lower than in Mexico? The unemployment rate in Mexico is higher than in the United States. As the price of airfares falls, airlines experience a spike in business. If the government increases the minimum wage, the unemployment rate will rise. The government ought to increase the minimum wage so that incomes rise.

The unemployment rate and the decisions of individual firms and workers to encourage or impede hiring, as well as to search for work, respectively. As the price of airfares falls, airlines experience a spike in business. If the government increases the minimum wage, the unemployment rate will rise.

Which points or combinations of produced goods on a production possibilities curve are not attainable with the current level of resources? Those lying beyond the curve. Those points where one good is produced entirely at the cost of the other good. Those lying on the curve. Those lying inside the curve.

Those lying beyond the curve.

True or false: Almost all nations have experienced widespread unemployment and unused production capacity from business downturns at one time or another.

True

Which of the following are economic themes considered in macroeconomics? The unemployment rate. National income. A firm's output. International trade. The level of prices in the economy. A firm's income or total revenues.

- The unemployment rate. - National income. - International trade. - The level of prices in the economy.

In the following figure, the opportunity cost (OC) of producing at C, rather than at B, is __________, whereas producing at D, rather than at C, is_________. 7 thousand robots; 4 thousand robots 3 thousand robots; 2 thousand robots 2 thousand robots; 2 thousand robots 9 thousand robots; 7 thousand robots 3 thousand robots; 3 thousand robots 2 thousand robots; 3 thousand robots

2 thousand robots; 3 thousand robots

Which of the following best exemplifies the relationship between a capital good and a consumer good service? A commercial baking oven and loaves of bread. A crane and a skyscraper A Caterpillar earth-moving front loader and its operator A brand new Dell computer and printer

A commercial baking oven and loaves of bread

Which of the following describes a budget line? A curve showing various combinations of two products a consumer can purchase with a specific amount of income. A curve showing various combinations of two or more products a consumer can purchase at different prices. A curve showing various combinations of two products an economy can produce with a specific amount of resources. A schedule showing various combinations of two or more products a consumer can purchase at different prices.

A curve showing various combinations of two products a consumer can purchase with a specific amount of income.

_____________ in income shifts a consumer's budget line to the left.

A decrease

Which of the following are issues most explored in microeconomics? A firm's decision to hire more workers Measuring total revenues of a firm or household The expenditures of a government entity Unemployed and inflation rates Measuring the price of specific goods

A firm's decision to hire more workers Measuring total revenues of a firm or household The expenditures of a government entity Measuring the price of specific goods

Which of the following illustrates that at any point in time, a fully employed economy must sacrifice some amount of one good to obtain more of another god? Marginal analysis A budget line A production possibilities table Macroeconomics A budget constraint

A production possibilities table

Which of the following best clarifies the " other-things-equal" assumption? Those variables under immediate consideration for a particular analysis are all held constant. All variables except those under immediate consideration are held constant for a particular analysis. All variables are held constant or do not change for a particular analysis. All variables in particular analysis are given equal weight or consideration when used in a particular analysis. Those variables under immediate consideration for a particular analysis are given equal weight.

All variables except those under immediate consideration are held constant for a particular analysis.

Which are the following combinations are unattainable given a consumer's budget line? Combinations that fall on the budget line. Combinations that fall beyond the budget line. A combination that intersects either of the axes. Combinations that fall inside the budget line Combinations on the midpoint of the budget line.

Combinations that fall beyond the budget line.

__________ goods satisfy wants directly, whereas ________ goods do so indirectly.

Consumer; capital

What does each point on the production possibilities curve represent?

Efficiency in production

An increase in __________ will shift the budget line to the right.

Income

____________ comes in the form of wages, interest, rent, profit, and even from government programs.

Income

Which of the following includes all natural resources used in the production of goods and services? Entrepreneurial ability Capital Land Labor

Land

________________ in the discipline that examines either the economy as a whole or its aggregates.

Macroeconomics

Recently, you decided to super-size you fries at McDonald's. On the one hand, your decision to super-size considered the additional costs associated with the super-size, including the additional monetary, caloric and cholesterol intake, as well as the extra time you had to wait for those fries because a new batch was being prepared. On the other hand, you determined that the extra benefits from super-sized included a few more mouthfuls of satisfaction from an increased portion of fries. The benefits clearly outweighed the costs since you chose to super-size. Which of the following does this illustrate?

Marginal analysis

Economists do not include money as an economic resource because:

Money produces nothing

____________ economy considers the desirability of certain aspects of the economy and underlies expressions of support for particular economic policies.

Normative

As more and more of a particular good is produces, which of the following rises? Opportunity costs Unemployment Profits Employment Marginal evenie

Opportunity costs

Which of the following define ceteris paribus? Other-things-equal The idea, in particular analysis, "additional" factors, other than those under consideration, play a significant role in said analysis. The idea that factors other than those being considered in a particular analysis do not change In a particular analysis, "additional" factors, other than those under consideration, are given equal consideration when factored into an analysis.

Other-things-equal The idea that factors other than those being considered in a particular analysis do not change

____________ economics focuses on facts and cause-and-effect relationships.

Positive

Which of the following illustrates the attainable combination of two goods that can be produced given a specific set of resources. Demand and supply curve mode Opportunity cost Budget constraint Budget line Production possibilities curve

Production possibilities curve

___________ economic resources means limited goods and services.

Scarce

Which of the following enables society to produce more goods with current resources? Increases in labor Increases in population Technology Increases in Entrepreneurial ability

Technology

The scientific method consists of several elements, including: Accepting, rejecting, and adjusting a hypothesis. Observing real-world behavior and outcomes and formulating a hypothesis based in said observations. Continuing to test the hypothesis against facts. Observing real-world behavior and outcomes and formulating a law based on said observations.

accepting, rejecting, and adjusting a hypothesis. observing real-world behavior and outcomes and formulating a hypothesis based on said observations. continuing to test the hypothesis against facts.

In macroeconomics, an ________________ is a collection of specific economic units treated as if they were one unit.

aggregates

The highest-valued alternative that is given up or sacrificed when choosing to produce or consume one good over the other is referred as to be:

an opportunity cost

Combinations of goods lying outside the budget line, not the PPF: →suggest that consumer gains less utility than any point inside the budget line. →are attainable, given a consumer's income. →indicate that the consumer is not spending all his income. →are attainable if the country engages in specialization and trade.

are attainable, given a consumer's income

A nation's production possibilities curve (PPC) can shift outward:

as a result of specialization and trade with an increase in the quality and quantity of resources through the use of improved production techniques

Economic principles are generalizations relating to ___________ in economic behavior or to the economy itself.

average tendencies

Positive economics _________ value judgments, tries to establish _________ statements about economic behavior, and deals with ________ economic events.

avoids; scientific; actual

Economics develop theories of the ___________ of individuals (consumers, workers) and institutions (businesses, governments) engaged in the production, exchange, and consumption of goods and services.

behavior

The following figure illustrates the concept of a: production possibilities frontier budget line demand curve supply curve

budget line

Factories and storage, transportation and distribution facilities, as well as tools and machinery are all example of physical _____________ goods.

capital

The four general categories of economic resource are:

capital entrepreneurship natural resources labor

Every individual, whether rich or poor, faces the following problems:

choosing goods and services that maximize utility self-interested behavior limited income insatiable wants

Every individual, whether rich or poor, faces the following problems: choosing goods and services that maximize utility. self-interested behavior. limited income. insatiable wants.

choosing goods and services that maximize utility. self-interested behavior. limited income. insatiable wants.

A straight-line budget constraint indicates ____________ opportunity cost?

constant

Consumers must forego choices based on a limited budget because:

consumers spend their limited budget purchasing a combination of goods that maximize their utility.

A(n) ___________ in income will shift the budget line to the left.

decrease

Economic principles and modes are highly useful in:

determining cause and effect understanding how the economy operates explaining and predicting analyzing economic behavior

A statement about economic behavior or the economy that enables prediction of the probable effects of certain actions is known as an:

economic principle economic theory

The __________ problem refers to the need to make choices because economic wants exceed economic means.

economics

Even at higher levels of _________, people will still face trade-offs, choices, and opportunity costs.

income

When consumers purchase a good r service, they do so in order to ____________ their utility.

increase

Economic growth is a result of:

increase in the supply of resources improvements in resource quality technological advances

The ability to produce more of both consumer goods and capital goods should be the net result of:

increased supplies of the factory of production. economic growth.

The importance of the production possibilities model is that it shows the different combinations of the goods and services that society can produce:

inefficiently efficiently given a fixed amount of resources in fully employed economy

Arable land, water, machinery and a professional baseball player are all considered scarce economic ________ to production.

inputs

Points lying ____________ the production possibilities curve are attainable, reflecting less total output than can be produced.

inside

Which of the following can be stated as potentially true bout any economy? Increased supplies of the factors of production will only affect the current location on it's production possibilities frontier. its future location on its production possibilities frontier has no bearing on its current decisions. Increased supplies of the factors of production will cause its future location to expand inward. its current choice of positions on its production possibilities frontier helps determine its future location.

its current choice of positions on its production possibilities frontier helps determine its future location.

In addition to entrepreneurship, the resource of human capital and __________ consists of the physical action and mental activities that people contribute to the production of goods and services.

labor

Everyone, even the very wealthy, has a __________ (one word) amount of income.

limited

As a result of our ___________ income and ___________ wants, it is our self-interest to economize or pick and choose goods and services that maximize our satisfaction.

limited; insatiable

The economic term that means incremental "changes in" or additional changes is _____________ (one word).

marginal

The economic perspective focuses on _________________, therefore the decision maker must compare incremental benefits and costs.

marginal analysis

When comparing the additional or incremental costs versus additional or incremental benefits of a decision, one is engaging in:

marginal analysis

Suppose you are given a $100 gift card you choose to spend it on a number of goods. You will select a combination of goods that is best for you and that maximizes your satisfaction. In other words, your choices will account for the effect of:

marginal benefits and marginal costs of each good considered.

Advances in production technology enable a society to produce:

more goods with current or less resources.

To economists, land includes all ____________, or gifts of nature, used in the production process.

natural resources

The disagreement among economists involves ___________, value-based policy questions.

normative

The law of increasing ________________ states that as production of a particular good increases, the cost of producing an additional unit rises.

opportunity costs

Trade-offs arising from limited resources give rise to:

opportunity costs

Points lying ____________ the production possibilities curve represent greater, but unachievable levels of output with current inputs, then that at any point on the curve.

outside

Type of product A B C D E Pizzas (hundreds of thousands) 0 1 2 3 4 Robots ( thousands) 10 9 7 4 0 This _____________ ______________ table lists the different combinations of pizza and robots that can be produced with a specific set of resources.

production possibilities

A ___________________ lists the different combinations of two products that can be produced with a specific set of resources, assuming full employment.

production possibilities table

When individuals make decisions with some desired outcome in mind, they are engaging in:

purposeful behavior

Economics assumes that human behavior reflects "___________ self-interest."

rational

Land and mineral resources, transportation and communication facilities, factories and farm building, equipment, tools and machinery are all examples of:

scarce economic resources

Society's economizing problem involves:

scarce resources making choices in the face of scarcity opportunity cost

The concept that "there is no free lunch" reflects the notion that:

scarce resources are used to produce so-called "free goods" that have alternative uses that are given up in order to produce said "free" goods.

In a world of __________, the decision to obtain the marginal benefit associated with some specific option always includes the marginal cost of forgoing something else.

scarcity

Like the physical and life sciences, as well as other social sciences, economics relies on the ____________ method.

scientific

An entrepreneur:

takes the risk of earning profits or suffering losses from owning an enterprise makes strategic business decisions that set the course of an enterprise innovates

In economics, investment describes spending:

that pays for the production and accumulation of capital goods

A budget line describes:

the alternative combinations of two goods that a buyer can purchase with a given money income

Jill is unemployed and decides to spend the day at the spa. Jill's opportunity cost of spending a day at the spa is equal to:

the daily spa rate, any other monetary expenses, and the value of the best alternative activity in which Jill could be engaged.

At an output level that is greater than what is optimal:

the marginal cost of producing the good is greater than the marginal benefit

Consider the relationship between the price of gas and the quantity of gas consumed by drivers. If we are to consider the price of gas as the only factor affecting the quantity of gas consumed, while holding other factors such as a driver's incomes and tastes and preferences irrelevant, then we are invoking:

the-other-things-equal assumption ceteris paribus

Individual's economic decisions are purposeful or rational because:

they weigh benefits and costs

The function of an entrepreneur is:

to combine scarce resources and to produce a good or service. to create new products

The situation where one thing has to be given up in order to have some other item is called a:

trade-off

In the figure, obtaining more books by giving up some DVDs is called a ____________; whereas losing two books in order to gain 1 DVD is referred to as _________ cost.

trade-off; an opportunity

People desire goods and services that provide maximum utility. In fact, our desires or wants are:

unlimited

Combinations of goods that fall on the production possibilities curve:

utilize all of an economy's resources are efficiently produced are attainable

The economic assumption that human behavior reflects rational self interest is predicted on individuals:

weighing the cost and benefits of their decisions

Positive economics is concerned with __________, whereas normative economics deals with:

what is; what should be

Because consumers behave in a rationally self-interested manner, the consumer will purchase a good or service:

when the marginal benefit is greater than or equal to the marginal cost