BUSA 201 exam 1- PQ 1

According to economists, when the FDA raises the approval requirements for new drugs

society potantially loses a new drug approval

The real power of trade lies in people's ability to

specialize and increase production

The statement "john buys more good X as his income increases, ceteris paribus", means

John's income is the only influence that is being allowed to change

In a ____________, most economic decisions about what to produce, how to produce it, and for whome the produce it are make by buyers and sellers.

Market- oriented economy

Suppose your teacher finishes class 30 minutes early on the day before an exam. She indicates that you may leave, or you may stay on for an optional study period that will last for the remaining 30 minutes of the scheduled class time. You should:

Only choose to stay if the benefits gained from the extra study session exceed the cost of another 30 minutes in class

"after every fall election, the weather starts to turn cold, therefor elections cause cold weather". This statement

fails to recognize the association is not causation

Booms and busts refer to the:

fluctuations in economic activity over time

When markets don't align self- interest with social interest:

governments may improve the situation by changing incentives

Economics is primarily the study of

how individuals make choices because of scarcity

An increase in the general price level is

inflation

The statement, "Violent crime has decreased in the last five years,"

is positive because it can be tested

Because information is costly to acquire,

people will rationally choose not to become fully informed when making decisions

Amoung the most powerful institutions for supporting good incentives are:

property rights

"If Tom had twice as much money, he could consume twice and much. If everyone had twice and much money, they could consume twice as much". This illustrates

the fallacy of composition

What is the "invisible hand"?

the idea that people pursuing their own self interest actually benefit the public at large

The opportunity cost of a choice is

the value of opportunities lost

Everyday people rely on the work of others to provide us with food, clothing, and shelter. These people work for out benefit because:

they benefit by doing so

You must decide whether to attend class tomorrow morning or take your friend to the airport. Your decision highlights the following "big idea" in economics

trade offs are everywhere