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