Pearson Dynamic Study Set
What is the percentage change in price for a shirt that was marked down from $40 to $28?
-30%
Refer to the previous graph. What is the best descriptor of the relationship between disposable income and consumption spending?
A positive relationship
Macroeconomics can be used to understand all of the topics listed below, except
A: how a consumer decides between the purchase of two different cars, what causes economic booms and recessions, national unemployment trends, how the national economy works
Countries gain from specializing in producing goods in which they have a(n) __________ advantage and trading for goods in which other countries have a(n) __________ advantage.
Comparative, comparative
According to the rationality assumption, people:
Do not intentionally make decisions that would leave them worse off
Consider the following statement: "In general, profit opportunities are rare. At any time, many people are searching for them, and as a consequence, few exist." Which type of market does this statement best describe?
Efficient market.
Which of these government policies can help economic growth?
Ensuring political stability and relatively little corruption
On a time series graph, time is measured along the vertical scale.
False
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?
Which of the following are not essential components of an economic model?
Hypotheses, Variables, Assumptions, A: Normative Statements
Which of the following questions can be answered using normative economic reasoning?
If a college provided more financial aid, would more students go to college?
Which of the following is a positive economic statement?
If minimum wages rise then unemployment will rise
Which of the following is an example of a positive question?
If the college increased tuition, would class sizes decline?
Economics
Is concerned with how people respond to incentives.
Economists believe that an individual or firm should continue any activity until:
MB=MC
Fill in the blank: ____________ is the study of how households and businesses make choices, howthey interact in markets, and how the government influences their choices.
Microeconomics
A formal statement of theory, usually a mathematical statement of a presumed relationship between two or more variables, is called a __________. A ______ can change over time or across observations. The importance of the ceteris paribus assumption when using models is that:
Model Variable it allows researcher to isolate the effect of one event on another without the influence of outside variables.
Which of the following countries has an economy where most of the resource allocation is determined by a central planning authority?
North Korea
occurs when a domestic firm shifts production to a different country.
Outsourcing
Which of these is NOT a source of market failure?
Perfect competition
In a market system, which of the following provides the information that individuals need to make decisions about resource allocation?
Prices
Understanding economics can help policymakers devise strategies to do all of the following excep
Reduce Poverty Levels, increase our standard of living, A: eliminate climate change, encourage business formation
Which of the following statements best defines scarcity?
Scarcity is a situation in which unlimited wants exceed the limited resources available to fulfillthose wants.
In his 1776 book, "An Inquiry into the Nature and Causes of the Wealth of Nations," Adam Smith notes that specialization increases productivity. Which of the following was the cause of this phenomenon?
The division of labor
Marlene decided to close down her retail clothing store and go back to work for a large corporation, even though she was making an accounting profit. Her decision was based on the fact that she would make more money in her old job than she was making in the retail clothing store. Marlene's decision factored in:
The opportunity cost of lost wages from keeping her store open.
In economics, how do rational people behave?
They decide on an action only if its benefits outweigh its costs.
When graphing two variables, if the line slopes upward as you move from left to right then the variables exhibit a positive relationship.
True
The slope of a straight line equals the change in the value on the __________ axis __________ by the change in the value of the other axis measured between any two points on the line.
Vertical, Divided
Which of the following is not among the fundamental economic questions that every society mustsolve?
What goods and services will be exchanged?
You and your neighbor pick apples and cherries. If you can pick apples at a lower opportunity cost than your neighbor can, which of the following is true?
You have a comparative advantage in picking apples.
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
What type of assessment is one in which a person's values and political views form part of thatassessment?
a normative assessment
If the president of Columbia commented that "we should do something to reduce inflation in Columbia," this would be an example of:
a normative statement
The statement "A minimum wage actually reduces employment" would be considered what type ofstatement?
a positive statement
Which of the following is achieved when a good or service is produced up to the point where themarginal benefit to consumers is equal to the marginal cost of producing it?
allocative efficiency
Ms. Boulware is the best lawyer and the best secretary in town. She has:
an absolute advantage in both jobs
A product produced in a foreign country and purchased by residents of the home country is called:
an import
What is the name given to the development of a new good or a new process for making a good?
an invention
Economics is the study of all of the following except a. how the prices of goods and services are determined. b. how people make decisions, given scarce resources. c. how to eliminate scarcity with new ideas and inventions. d. how buyers and sellers interact in a market.
c
Graphs are often used in economics because they
can simply complex topics
__________ goods and services are those bought by businesses to be used to increase efficiency or enhance production.
capital
Economic models often simplify the real world by holding all things equal and changing one variable to determine the impact of the change. The "all things equal" assumption is also known as
ceteries paribus
Fill in the blank. In economics, optimal decisions are made _____________.
d. at the margin
If your nominal wages increased by 10% and inflation was 15%, your real wage;
decreased
Which of the following terms best refers to a fair distribution of economic benefits?
equity
One of the first steps in deciding whether to complete your education is to:
evaluate the marginal cost and marginal benefit of that decision
Goods and services produced domestically but sold to other countries are called __________.
exports
A patent is government protection that gives an inventor exclusive rights to profit from their invention __________.
for a period of 20 years
Tangible products like cars and televisions are referred to as:
goods
If a country has a comparative advantage in the production of a good, then that country:
has a lower opportunity cost in the production of that good
Macroeconomics can be used to understand all of the topics listed below, except:
how a consumer decides between the purchase of two different cars
which of the following is a positive economic statement?
if minimum wage rates rise, then unemployment will rise Positive economic statements are statements of fact that imply no value judgment. Notice that the correct response merely stated what would happen if minimum wage went up and made no statement about whether that was good or bad. The other responses all imply value by using the word 'should.' If we 'should' do something we are implying that is a good outcome and something we need to pursue.)
Contracts, insurance, patents and accounting rules are:
inventions that make a market work better
The importance of the ceteris paribus assumption when using models is that:
it allows researcher to isolate the effect of one event on another without the influence of outside variables.
The field of economics that deals primarily with the factors that determine wage rates, employment, and unemployment is called:
labor economics.
Which of the following covers the study of topics such as inflation and unemployment?
macroeconomics
Social security payments are indexed to inflation so that recipients can
maintain their purchasing power
Decision analysis that involves comparing marginal costs and marginal benefits to determine the best course of action is known as
marginal analysis
The additional benefit resulting from a small increase in some activity is called the;
marginal benefit
The optimal economic decision is to continue any activity, investing or otherwise, up to the point where:
marginal benefit equals marginal cost
Whenever markets do not produce the most efficient outcomes on their own, we call this phenomenon:
market failure
The lowest amount a firm is legally allowed to pay an employee is known as the __________.
minimum wage
The united states is best classified as a:
mixed ecomony
Which of the following is the best classification for the economies of the United States, Canada,Japan, and Western Europe?
mixed economies
Economic variables that are calculated in current year prices are referred to as __________ variables, while variables that have been corrected to account for the effects of inflation are __________ variables.
nominal, real
What type of economic analysis is concerned with the way things ought to be?
normative analysis
Which of the following is not an essential component of an economic model?
normative statements
What is the name given to the highest-valued alternative that must be given up to engage in any activity?
opportunity cost
Which of the following is known as the highest-valued alternative that must be given up in order to engage in an activity?
opportunity cost
When nations specialize in their comparative advantage and engage in trade:
overall standards of living increase
An electric power producer generates an external cost by emitting high levels of pollutants when it uses coal to generate power. The presence of this externality leads to:
overproduction
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
The stock of computers, factory buildings and machine tools used to produce goods is known as:
physical capital
Which of the following involves an estimation of the benefits and costs of a particular action?
positive analysis
Absolute advantage is the ability of an individual, firm, or country to:
produce more of a good or service than competitors using the same amount of resources
What does an economy achieve by producing a good or service at the least possible cost?
productive efficiency
Economics is the study of choice under conditions of:
scarcity
The principle of opportunity cost evolves from the concept of
scarcity
The principle of opportunity cost evolves from the concept of:
scarcity
Economic models are
simplifications of reality that focus only on key relationships and ignore less relevant details.
The role of the entrepreneur always involves:
taking risks
A firm's processes to produce goods and services are called
technology.
Human capital is
the accumulated training and skills that workers possess.
Which of the following is not a possible opportunity cost of attending college?
the cost of housing
What is the purpose of an economic hypothesis?
to establish a causal relationship
Fill in the blanks. The slope of a straight line equals the change in value on the ____________ axis____________ by the change in the value on the other axis between any two points on the line.
vertical; divided
Which of the following terms summarizes the situation in which a buyer and a seller exchange aproduct in a market and, as a result, both are made better off by the transaction?
voluntary exchange
The principle of diminishing returns applies
when at least one input is fixed
When is output lower than the efficient level?
when marginal benefit is greater than marginal cost
When is output higher than the efficient level?
when marginal benefit is less that marginal cost
The vertical axis on a graph is also known as the
y-axis
Which of the following best describes the characteristics of models used in economics?
Models are simplifications of reality that include only essential elements and exclude lessrelevant details.
If the president of Columbia commented that "we should do something to reduce inflation in Columbia," this would be an example of:
a. market economies b. centrally planned economies c. mixed economies d. all of the above (Answer)
What types of economies require that answers be given to the following questions: what goods andservices will be produced, how will the goods and services be produced, and who will receive thegoods and services produced?
a. market economies b. centrally planned economies c. mixed economies d. all of the above (Answer)
The ability of an individual, firm, or country to produce more of a good or service than competitors using the same amount of resources is known as:
absolute advantage
According to the theory of comparative advantage, specialization and free trade will benefit:
all trading partners who specialize in goods where they have comparative advantage
In what type of economy does the government decide how most 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
Macroeconomics is concerned with all of the following except
political party affiliations