Macro Exam 1
John is attempting to decide on a movie. (All movies have the same ticket price and play at the same time/location.) He determines that the new Batman movie is preferred to the new Spider-Man movie and that both the Batman and Spider-Man movies are preferred to the new Superman movie.
Optimization using marginal analysis, since he is calculating the change in net benefits between alternatives.
Nikki decided to jog 3 miles for exercise by reasoning that a 3-mile jog was better than either a 2-mile jog or a 4-mile jog.
Optimization using marginal analysis, since she is calculating the difference in net benefits between alternatives.
The costs of many environmental regulations can be calculated in dollars, but the benefits often are in terms of lives saved (mortality) or decreases in the incidence of a particular disease (morbidity). What does this imply about the cost-benefit analysis of environmental regulations?
We must first translate the mortality and morbidity data into dollars in order to compare it to the costs of the regulations.
causation occurs when there is
a logical cause and effect relationship
the statment that the US government should increase carbon taxes to $10/ton of carbon dioxide to reduce emissions that cause global warming is
a normative statment
policy decisions made by the government as analyzed by
both micro and macro economics
In a perfectly competitive market, sellers _________ and buyers _________.
cannot charge more than the market price; cannot pay less than the market price.
more economic growth and higher employment levels is likely to be a
causation
more police officers and lower crime rates is likely to be a
causation
the length of skirts and NBA performance is
correlation
suppose your goal is to get in shape; how would you evaluate your options and choose an optimal one
do a cost-benefit analysis to compare the alternatives
the insight of the article is that when you are trying to save money
dollars not percentage, matter
empiricism describes a situation where
economist use data to analyze what is happening in the world
lower infant mortality rate is an ... and an improvement in nutrition is the ...
effect , cause
when economist test their theories using evidence based analysis, they are most likely using
empiricism
in equilibrium
everyone simultaneously optimizes, so that no one benefits by changing their behavior
if an economic experiment works in a random controlled setting, its policy findings are readily applicable to real life scenarios
false
when you have randomized a control trial, the only difference is the treatment because both groups have been assigned randomly
false
which of the following is true regarding the concept of causation
it describes how one event can bring about change in another
which of the following is NOT an example of a casual claim
it rains more often on days you wash your car
In a perfectly competitive market, if one seller chooses to charge a price for its good that is slightly higher than the market price, then it will _________.
lose all or almost all of its customers.
a policy such as an economic stimulus to spur the economy would be studied by
macro; because it deals with the economy as a whole
micro studies .... while macro studies ....
micro studies A SMALL PIECE OF THE OVERALL ECONOMY, while MACRO STUDIES THE ECONOMY AS A WHOLE
your budget constraint illustrates the concept of
trade offs
because of this, consumers make too much effort to save on cheap items and too little to save on expensive items
true
At a yard sale, Reagan calculated that she was willing to pay $200 for a queen bed that was being sold for $100 (generating net benefit of $100) and that she was willing to pay $220 for a king bed that was being sold for $300 (generating net benefit of -$80).
Optimization using total value, since she is comparing the net benefits between alternatives.
You are thinking about buying a house. You find one you like that costs $350 comma 000350,000. You learn that your bank will give you a mortgage for $280 comma 000280,000 and that you would have to use all of your savings to make the down payment of $70 comma 00070,000. You calculate that the mortgage payments, property taxes, insurance, maintenance, and utilities would total $1 comma 6801,680 per month. Which of the following is true regarding your calculation of the cost of owning the house?
It should include the opportunity cost of the money used to make the down payment. This money could be earning interest in a bank.
the definition of economics states that it is the study of how
agents chose to allocate scarce resources and the impact of those choices on society
equilibrium describes a situation where
no one would benefit from changing his or her behavior
optimization describes a situation where
people weight costs and benefits when making a decision
which of the following statements would not be considered a positive statement
production in the automobile industry is still low and should be subsidized by the government
The Law of Demand states that as the price of a good increases, ceteris paribus, the
quantity demanded decreases
poorer people are compelled to value saved pennies in absolute rather than
relative terms
what is meant by randomization in the context of an economic experiment
subjects are assigned by chance, rather than by choice, to a group
behavioral economics suggests that consumers are often frugal in the wrong way because they
tend to focus on the percentage rather than the amount they save
when making decisions, you should consider
the monetary cost as well as the opportunity cost of the activities. he goal is to choose the option that offers the greatest net benefit
whats the opp cost of a decision you make
the next best option
Which of the following is not one of the five major factors that shifts the demand curve when it changes?
the price of the good itself
Which of the following is not one of the four major factors that shifts the supply curve when it changes?
the price of the good itself