Chapter 1 HW

What is the equation for percent change?

(final- initial)/initial *100

Economics is a social science because

-it applies the scientific method to the study of the interactions among individuals. -it is based on studying the actions of individuals. -it considers human behaviorlong dash—particularly ​decision-making behavior.

Any model is based on making assumptions because

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

What is the study of the choices people make to attain their goals, given their scarce resources?

Economics

Microsoft charges a price of​ $599 for a copy of Windows 7. Is this pricing decision​ rational?

When we assume the managers at Microsoft have used all available information and have weighed all known benefits and​ costs, we are assuming rationality.

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

buyers and sellers

Who decides what goods and services will be produced?

consumers, firms and the government

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

marginal benefit equals marginal cost

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

mixed economy

Economics is about __________ which measures the costs and benefits of different courses of action

positive analysis

One of the basic facts of life is that people must make choices as they try to attain their goals. This unavoidable fact comes from a reality an economist calls

scarcity

Opportunity cost is

the highest valued alternative that must be given up to engage in an activity