Ag Microeconomics- Exam 1
comparing a set of feasible alternatives and picking the best one is an optimization process called
cost-benefit analysis
what are some subjects to the free-rider problem
National security, a neighborhood watch, public libraries
let's say that you are trying to decide what to do on Friday at 11 a.m. You rank your possible options from the one you value the most to the one that you value the least in the following order: going to class, sleeping in late, going to work early, getting lunch, going to the gym to exercise, and watching television If you decide to go to class, then what do we know about the opportunity cost of your decision?
The opportunity cost would be sleeping in late, since it was your next-best option
Economics is divided into two broad fields of study: microeconomics and macroeconomics. Microeconomics studies _________, while macroeconomics studies _________.
a small piece of the overall economy; the economy as a whole
the definition of economics states that it is the study of how
agents choose to allocate scarce resources and the impact of those choices on society.
Suppose that you allocate $20 each week for your entertainment budget. This money is spent on two items: either renting movies for $1 each at Redbox or downloading songs from iTunes at $1 each Given this information, which of the following would represent your budget constraint for entertainment?
amount spent on iTunes + amount spent at Redbox =$20
a surge in cocoa prices is ____________ and a pest attack not eh cocoa crop is ____________
an effect, the cause
lower infant mortality is _______ and an improvement in nutrient is _____________
an effect, the cause
to say that economists use the scientific method means that they are using
an ongoing process to develop models of the world and then test and evaluate those models
when making your decision about which activity, you should consider the monetary cost ___________ the opportunity cost of the activities. The goal is to choose the option that offers the greatest _________ benefit.
as well as, net
policy devisions made by the government are analyzed by
both microeconomics and macroeconomics
Suppose your New Year resolution is to get back in shape. You are considering various ways of doing this: you can sign up for a gym membership, walk to work, take the stairs instead of the elevator, or watch your diet. How would you evaluate these options and choose an optimal one?
do a cost-benefit analysis to compare the alternatives
empiricism describes a situation where
economists use data to analyze what is happening in the world
for a market to be in equilibrium, three conditions must hold. The amount produced by sellers must be ______ the amount purchased by buyers. The costs of making a product must be _______ the final price at which the product sells Buyers must place a value on the uses of the product that is _______________ the cost of buying the product
equal to, less than, greater than
which of the following is true regarding the concept of causation
it describes how one event can bring about change in another
in which of the following areas will taking an economics course help benefit you throughout your life
it will give you the logic behind using cost-benefit analysis when evaluation decisions, it will help you to analyze and predict human behavior in a variety of situations, it will instill the concept that what activity is given up by a decision plays an important role when making choices
a policy such as passing an economic stimulus to spur the economy would be studied under _________________, since it deals with ___________________
macroeconomics, the economy as a whole
Equilibrium describes a situation where
no one would benefit from changing his or her behavior
the ethical implications of a hotly debated government policy would best be considered a
normative question, since it deals with a subjective issue based on personal preferences
the statement that the United States is too aggressive in increasing the money supply is a _______________ statement nice it describes what people _____________.
normative, ought to do
economics, anthropology, psychology, sociology, and political science all study human behavior. economics differs from these other social sciences because it also addresses these three key concepts:
optimization, equilibrium, and empiricism
what are the three principles of economics
optimization, equilibrium, empiricism
the goal of optimization for an individual is to maximize
overall well-being
optimization describes a situation where
people weigh costs and benefits when making a decision
Free riding occurs when ________ are out of sync with ________
people's private benefits, the public interest
the statement that the United States has a budget deficit that is in excess of $15 trillion is a __________ statement since it describes what people ______________.
positive, actually do
when deciding whether to install visible countdown timers for pedestrians at crosswalks, which of the following would be considered in the cost-benefit analysis
the cost in terms of dollars of installing these new timers all over the city, the value of the lives lost by drivers who watch the countdown timers and try to make it through a light, the value of the pedestrians' lives saved by having the timers to assist in crossing the street, the higher the maintenance bill associated with fixing these more complex signals when they break down
during the process of optimization economists believe that people are considering
the feasibility of a choice, given the information available at the the time
how does the sample size affect the validity of an empirical argument
the larger the sample size the better
how do economists distinguish between models that work and those that don't
they test their models against real-world data
Your budget constraint for entertainment illustrates the concept of ________, since as you increase your purchases of one item, you ____.
trade-offs, must decrease your purchase of the other item
which of the following is more susceptible to the free-rider problem: state parks or street lights?
use of street lights is more susceptible since even those who don't pay taxes still benefit, while state parks can charge for admission, so that everyone who goes pays their shares
which of the following is not an example of causation
washing your car will lead to raining that day
the opportunity cost of an activity is a measure of _________ when you do that activity
what is given up