Arec chapter 1- Thinking like an economist

If the equation M=20 + 12h is graphed with M on the vertical axis and H on the horizontal axis, then the slope will be

12

Economics believe that scarcity is

A fundamental fact of life for everyone

A (n)______ variable is a variable in an equation whose value is determined by the value taken by another variable in an equation

Dependent

Your trying to decide to whether to go for a run. If you don't go for a run, you'll either watch TV or do your homework. Your opportunity cost of going in a run is?

Either the value you place on watching TV or the value you place on doing homework. Whichever is larger

Economics is best defined as the study of

How people make choices under the conditions of scarcity and the result of those choices for society

When deciding whether to take an action, one common pitfall is to

Ignore the implicate cost of the action

Suppose that each police officer hired by the City of Gotham generates an average benefit to the community of $500 a week. The average salary of police officers is $600 per week. Should the city of Gotham hire more or less police officers

Impossible to say

If the ______ Principal states that a person (a firm or society) is more likely to take an action if its benefit rises, and less likely to take action if the cost rises

Incentive

The increase in the total cost that results from carrying out one additional unit of an activity is its _______ cost

Marginal

The study of an individual choice under scarcity and its implications for the behavior of the prices and quantities in individual markets are known as

Microeconomics

A ______ economic principal is one that says how people should behave

Normative

The cost benifet principal is a ____ economic principal

Normative

The value of what must be forgone in order to undertake an activity is the _____ cost of that activity

Opportunity

Suppose you are trying to decide whether to look for street parking or pay $10 to park in a parking garage, you should

Park in the parking garage if you'd be willing to pay at least $10 to avoid the hassle of finding street parking

The incentive principal is a ______ economic principal

Positive

Costs that are beyond recovery at the moment a decision is made

Should not factor into the cost benefit calculation

Economic ____ is the benefit of taking an action minus the cost

Surplus

A quantity that is free to take on different values is a(n)

Variable

If you graph the line Y= a+bx with y on the vertical axis and an x on the horizontal axis, then a represents the

Vertical intercept

In calculating opportunity cost, the textbook includes:

both implicate and explicate costs

THe quantity that is fixed in value is knows as a (n)

constant

The fact that people do not always consciously weigh costs and benefits while making decisions

doesn't mean that economic models aren't useful for predicting behavior

A mathematical expression that describes the relationship between two or more variable goods is called a

equation

A(n) independent variable determines the value of another variable in an equation

independent

According to the incentives principal, when the benefit of a action arises, a person

is more than likely to take the action

One common pitfall is to

measure costs and benefits as proportions rather than absolute dollar amounts

A _____ economic principal is one that predicts how people will behave

positive

In Economics a _____ individual is someone with well defined goals who tries to fulfill those goals as best he or she can.

rational

When deciding whether to take an action, sunk costs

should be ignored

Along the straight line, the ______ is the ratio of the vertical distance the straight line travels between any two points to the corresponding horizontal distances

slope

The cost- benefit principal states that an individual or society should take an action if and only if

the extra benefits from taking the action are at least as great as the extra cost

Economic models are _____ if people do not consciously weigh costs and benefits when making decisions

useful even

The scarcity principal captures the notion that although we have boundless needs and wants, the resources available to us are limited to

Having more of one good usually means having less of another

How is a decrease in the vertical intercept represented?

Represented by a downward parallel shift

If you graph the line Y=a+bx on the vertical axis and on the X horizontal axis, the vertical intercept is __ and the slope is__

a;b

How is an increase in the vertical intercept of a line represented

Its represented by an upward parallel shift

How is average cost calculated?

The total cost of an undertaking n units of an activity divided by n

The average cost of carrying out an activity is

The total cost of undertaking n units of an activity divided by n

In the graph of a straight line, the vertical intercept is the value taken by the

Dependent variable when the independent variable is equal to zero

Average benefit is calculated how?

The total benefit of undertaking n units of an activity divided by n

A (n) ______ cost is a cost that is beyond recovery at the moment a decision is made

sunk

In the graph of a line, a decrease in the vertical intercept will lead to?

Downward parallel shift