Survey of Econ Homework CH 1
Identify examples of microeconomics and macroeconomics: Last month's U.S. inflation rate The rising prices of textbooks Sales volumes of Walmart stores How the government responded to the recent recession
Macroeconomics Microeconomics Microeconomics Macroeconomics
Ceteris paribus means
all other things unchanged
Economics models are
built using relevant observations, assumptions, and abstractions
Microeconomics deals with
individual units in the economy
Steven has two hours to complete an assignment in economics or to watch a movie. For Steven, the opportunity cost of spending the two hours watching a movie
is a lower score in the economics assignment
Water is considered a scarce good rather than a free good because
it has alternative uses
The economic way of thinking deals with
making choices by comparing marginal costs and marginal benefits
A simplified representation of a particular problem is a
model
Statements that make value judgements are
normative
The opportunity cost of a choice is the
value of the next best alternative not chosen
The fundamental economic questions every economic system must answer are
what, how, and for whom
Macroeconomics deals with
the analysis of the aggregate values in the economy
Scarcity is a situation in which
the available resources are not enough to satisfy the wants of the people
Identify normative or positive statements: "A high rate of economic growth creates more jobs" "The current rate of unemployment of 5 percent is too high." "Everyone in the country should be covered by national health insurance" "Smokers are more likely to be extroverts than nonsmokers"
Positive Normative Normative Positive
Which of the following is an example of a positive statement : Baseball players should not be paid higher salaries than the president of the U.S. A high rate of economic growth is good for the country. Everyone in the country needs to be covered by national health insurance. The rate of unemployment is 4 percent.
The rate of unemployment is 4 percent
Suppose you observe that the sun rises every morning at the six o'clock business report. If you conclude that the six o'clock business report makes the sun rise, you are committing the fallacy of
false cause
The problem of determining what goods and services society should produce exists because
resources are scarce
Economics is a
social science that deals with making choices among alternatives