Macroeconomics review 1
Which of the following statements about economic resources is true?
Economic resources are also called factors of production
Which of the following statements is true?
Every individual, no matter how rich or poor, is faced with making trade-offs
Which of the following is a positive economic statement?
If the price of iPhones falls, a larger quantity of iPhones will be purchased
Which of the following is a normative economic statement?
Opinion
All of the following are part of an economic model except
Opinions
Which of the following statements is true about scarcity?
Scarcity refers to the situation in which unlimited wants exceed limited resources
Soo Jin shares a one-bedroom apartment with her classmate. Her share of the rent is $700 per month. She is considering moving to a studio apartment which she will not have to share with anyone. The studio apartment rents for $950 per month. Recently, you ran into Soo Jin on campus and she tells you that she has moved into the studio apartment. Soo Jin is as rational as any other person. As an economics major, you rightly conclude that
Soo Jin figured that the additional benefit of having her own place(as opposed to sharing) is at least 250$
Which of the following is a microeconomics question?
What factors determine the price of carrots?
The three fundamental questions that any economy must address are:
What goods and services to produce; how will these goods and services be produced; and who receives them?
Automobile manufacturers produce a range of automobiles such as sports utility vehicles, luxury sedans, pickup trucks and compact cars. What fundamental economic question are they addressing by making this range of products?
What to produce?
When production reflects consumer preferences, ________ occurs.
allocative efficiency
The revenue received from the sale of ________ of a product is a marginal benefit to the firm.
an additional unit
Economists assume that individuals
are rational and respond to incentives
If the marginal cost of keeping a doctor's office open one additional hour per day is $200, then the doctor should keep the office open for one extra hour
as long as the marginal benefit she receives is just equal to or greater than $200
Arlene quits her $125,000-a-year job to take care of her ailing parents. What is the opportunity cost of her decision? 48) ______
at least $125,000
The decision about what goods and services will be produced made in a market economy is made by
consumers and firms choosing which goods and services to buy or produce
Economists assume that rational behavior is useful in explaining choices people make
even though people may not behave rationally all the time
Microeconomics is the study of
how households and firms make choices
In economics, the term ________ means "additional" or "extra."
marginal
Economists reason that the optimal decision is to continue any activity up to the point where the
marginal benefit equals the marginal cost
The extra cost associated with undertaking an activity is called
marginal cost
A grocery store sells a bag of potatoes at a fixed price of $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?
marginal revenue
An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue.
market
The term ________ in economics refers to a group of buyers and sellers of a product and the arrangement by which they cometogethertotrade.
market
The highest valued alternative that must be given up to engage in an activity is the definition of
opportunity cost
Suppose that some teachers have decided that economic and financial uncertainty have made the prospect of retiring more risky, and therefore carry a higher cost than not retiring. By using all available information as they act to achieve their goals, these teachers are exemplifying the economic idea that
people are rational
Suppose the U.S. government encouraged new medical school graduates to take over existing practices from doctors wishing to retire by paying both the new and retiring doctors $100,000. These doctors would be exemplifying the economic idea that
people respond to economic incentives
Economic models do all of the following except
portray reality in all its minute details
Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________, meaning they make the best decisions given their knowledge of the costs and benefits.
rationally
In economics, choices must be made because we live in a world of
scarcity
The basic economic problem of ________ has always existed and will continue to exist.
scarcity
By definition, economics is the study of
the choices people make to attain their goals, given their scarce resources
Macroeconomics is the study of
the economy as a whole
Consider the following economic agents:
the government
Who, in a centrally planned economy, decides what goods and services will be produced with the scarce resources available in that economy?
the government
How are the fundamental economic decisions determined in North Korea?
the government decides because North Korea is a centrally planned economy
Suppose when the price of laptops fall, college students buy more laptops. This implies that
there is a negative relationship between laptop prices and the quantities purchased by college students
The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of
trade-off
Economists assume that rational people do all of the following except
undertake activities that benefit others and hurt themselves
Marginal analysis involves undertaking an activity
until its marginal benefits equal marginal costs
Making optimal decisions "at the margin" requires
weighing the costs and benefits of a decision before deciding if it should deb pursued
Society faces a trade-off in all of the following situations except
when some previously unemployed workers find jobs
Which of the following is not an example of an economic trade-off that a firm has to make?
whether is should produce more of its product
Which of the following statements is false?
A straight line has a slope of zero
Which of the following questions or statements regarding medical school is normative?
Medical students who enter specialized fields make a larger contribution to society than do student who enter primary care