Macroeconomics Chapter 1 Quiz
Equilibrium is when no individual ____
would be better off making a different choice
True/false? Resources and inputs in production are unlimited.
False
When should government intervene to improve society's welfare?
If market failures exist
True/false? Economists believe people respond to incentives.
True
True/false? Exchanges taking place in a market system are voluntary.
True
True/false? Making a choice involves an opportunity cost.
True
True/false? Markets move toward equilibrium.
True
True/false? People usually exploit opportunities to make themselves better off.
True
True/false? Trade allows for specialization
True
The purpose of an economic system is to
allocate scarce resources
Scarcity means that
choices must be made
Macroeconomics is the branch of economics studying:
fluctuations in the overall level of business activity
The focal point of economic inquiry is
individual choice
An economy is efficient when
it has exploited all opportunities to benefit someone without making anyone else worse off
Invisible hand means that
market economies are able to harness the power of individual self-interest for the good of society as a whole
Market failure results when
pursuit of individual self-interest leads to bad results for society as a whole
Adam Smith uses the example of pin-making to introduce the concept of:
specialization
Economists think people change behavior when ______
they are given incentives to do so
Opportunity cost
what you give up in order to get something