Micro Econ Chapter 1

Two events, A and B, tend to happen together, i.e, they are correlated. What would best describe their causation?

All these would describe their causation: B causes A, an indirect causation. A causes B, a direct causation. A and B result from a third event, C.

According to the rationality assumption, people:

Do not intentionally make decisions that would leave them worse off

Which of these covers the study of topics such as inflation and unemployment?

Macroeconomics

__________ is the study of how households and businesses make choices, how they interact in markets, and how government influences their choices.

Microeconomics

When an investment counselor advises a client as to the risk/return trade-off on an investment, this type of help is called _______________ economics.

Prescriptive

The principle of opportunity cost evolves from the concept of

Scarcity

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

The cost of housing

Which of these is a macroeconomic study?

The study of how fast prices in general are rising.

If the president of Colombia commented that "we should do something to reduce inflation in Colombia," this would be an example of:

a normative statement

Economic activities that are feasible have what characteristics:

affordable and available

"People should strive to be fundamentally good."

is a normative statement.

Economics:

is concerned with how people make choices

The measure of benefits minus costs is:

net benefit

Selecting the best feasible option among available manufacturing options is called:

optimization

Economics is the study of choice under conditions of:

scarcity

Costs that cannot be recovered and therefore aren't relevant to a decision for a future activity are called _______________ costs.

sunk

The optimal economic decision is to continue any activity, investing or otherwise, up to the point where:

the additional benefit of the activity is at least more than the additional cost of the activity

A definition of opportunity cost is:

the value of best thing that you give up to get something else.