Econ 201- Chapter 1 Quiz and Homework

What kind of economy does the government control the allocation of resources?

A centrally planned economy

A state of the economy in which production is in accordance with consumer preferences.

Allocative efficiency

_______________________ decides what goods and services will be produced.

Consumers, firms, and government

_______________ is the study of the choices people make to attain their goals, given their scarce resources.

Economics

Which of the following is a positive economic statement?

If minimum wage rises, then unemployment will rise.

Which of the following covers the study of topics such as inflation or unemployment?

Macroeconomics

An economy in which the decisions of households and firms interacting in markets allocate economic resources

Market economy

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

Mixed economy

The ________________ of any activity--such as producing a good or service-- is the highest-valued alternative that must be given up to engage in that activity.

Opportunity cost

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

The cost of housing

Microeconomics

The study of how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices.

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

Tangible products like cars and televisions are referred to as:

goods

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.

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

marginal benefit is equal to marginal cost

The United States economy is best classified as a:

mixed economy

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 affiliation

The principle of opportunity cost evolves from the concept of:

scarcity

When the federal government crafts environmental policies that make it less expensive for firms to follow green initiatives,

the policies are consistent with economic incentives.

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

A hypothesis in the economic model is

A statement that may be either correct or incorrect about an economic variable, usually about a casual relationship, and tested before it can be accepted or rejected.

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?

Trade-offs force society to make choices, particularly when answering the following three fundamental questions:

What goods and services will be produced? How will the goods and services be produced? Who will receive the goods and services produced.

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

evaluate the marginal cost and marginal benefit of that decision

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.

Macroeconomics

the study of the economy as a whole, including topics such as inflation, unemployment, and economic growth

Any model is based on making assumptions because

we cannot analyze economic issues unless we reduce its complexity, and models have to be simplified to be useful

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

Capital

According to the rationality assumption, people:

Do not intentionally make decisions that would leave them worse off.

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

Invention

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

North Korea

The situation in which a good or service is produced at the lowest possible cost.

Productive efficiency

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

how a consumer decides between the purchase of two different cars.

Economics:

is concerned with how people respond to incentives

Economics is a social science because:

it consider human behavior--particularly decision-making behavior, it is based on studying the actions of individuals, and it applies the scientific method to the study of the interactions among individuals.

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

physical capital

economics is the study of choice under conditions of:

scarcity

______________ is concerned with what is, and _________________ is concerned with what ought to be. Economics is about _________________, which measures the cost and benefits of different courses of action.

Positive analysis, normative analysis, positive analysis

An economy in which the government decides how economic resources will be allocated

centrally planned economy

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

natural resources