Econ Ch. 1

Positive economics is concerned with___, whereas normative economics deals with ____.

what is; what should be

Factories, storage, transportation and distribution facilities, as well as tools and machinery are all examples of ___ goods.

capital

The function of an entrepreneur is:

to combine scarce resources and to produce desired goods or services; to organize other factors of production in the production of new products

A production possibilities curve shows the attainable combination:

of two goods that can be produced given a specific set of resources

T&F: A trade-off occurs when some quantity of production or consumption of a good or service is given up in order to produce or consume another good or service.

True

What is the discipline that examines either the economy as a whole or in the aggregate?

Macroeconomics

Combination of goods that fall inside the PPC represent:

inefficient use of resources; goods that are attainable; less total output in an economy

The highest valued alternative that is given up or sacrificed when choosing to produce or consume one good over another is referred to as:

opportunity cost

The economic question of '____ to produce' is about decisions related to the mix of factor inputs used to produce goods and services.

how

Combinations of goods that fall on the PPC:

utilize all of an economy's resources; are attainable; are efficiently produced

Economics is the science concerned with the allocation of ___ resources among competing uses

scarce

Points lying ____ the PPC are unattainable with the current availability of resources and technology.

outside

What is the result from scarcity with respect to economic resources?

the production of limited goods and services

What are considered land to an economist?

water, oil and mineral deposits, forests, arable land, sunlight

The economic question of '____ to produce' is about decisions related to the mix of goods and services to make available in a given economy

what

The law of increasing opportunity costs states that as production of a particular good ___, the opportunity cost of producing an additional unit ___.

rises; rises

T&F: The three main decisions that must be addressed by an economic system include what goods are to be produced, who will produce them, and where they will be produced.

False

The factors of production are

land, labor, capital, and entrepreneurship

What consists of the physical and mental activities that people contribute to the production of goods and services?

labor

What is the laissez-faire?

the role of government is limited to protecting private property; the role of government is to ensure the free operation of the market system

The law of increasing ___ states that as production of a particular good increases, the cost of producing an additional unit rises

opportunity cost

An economy can produce either guns or butter with all available resources. Suppose it currently produces all butter and it chooses to produce some guns, thereby giving up some production of butter. As a result, the first 200 units of guns are produced at

the law of increasing opportunity costs

What is ceteris paribus?

other-things-equal assumption; the idea that factors other than those being considered in a particular analysis do not change

What is the discipline of economics concerned with individual units such as a person, household, firm or industry?

Microeconomics

In the type of economy existing in the US and most other countries the government plays ___ role

susbstantial

In addition to entrepreneurship, the factor of production defined as __ consists of the physical actions and mental activities that people contribute to the production of goods and services.

labor

Which of the following best clarifies the "other-things-equal" assumption?

All variables except those under immediate consideration are held constant for a particular analysis.

What defines positive economics?

measurable or scientific statements about economic behavior; statements based on facts empirical cause-and-effect relationships

T&F: Positive economics encourages value judgements.

False

What is normative economics?

based on subjective or value judgments

What does each point on the PPC represent?

efficiency in production; the maximum potential output of two or more products

What goods satisfy directly? What goods satisfy indirectly?

consumer goods, capital goods

Arable land, water, machinery, and a pro baseball player are all considered scarce economic ___ to production.

inputs

Combinations of goods that are beyond the PPC ___.

require economic growth; require resources that are not available, are unattainable

What is the importance of the PPC?

to show the different combinations of goods and services that society can produce efficiently, inefficiently, given a fixed amount of resources, and in a fully employed economy

Natural resources, labor, human capital, physical capital and entrepreneurship are all scarce economic resources privately or collectively owned by members of society. Where these scarce resources are used to produce goods or services..

a cost borne by society in utilizing these resources to produce any good or service, no "free lunch

What does an entrepreneur do?

innovates, makes strategic business decisions that set the course of an enterprise, takes risk of earning profits or suffering losses from owning an enterprise

The law of increasing opportunity costs is driven by?

resources that are not equally productive in the production of different goods or interchangeable

Points that are ____ the PPC are attainable so long as the economy uses all of its available resources.

along

What does each point on the PPC represent?

maximum potential output of two or more products, efficiency in production

To produce at a point lying ____ the PPC would require economic growth.

outside

Each point on the PPC represents some _____ of two or more products.

output combination