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
True or false: Economics, as a social science, is concerned with how to make money?
False
________ is the notion that, in general, the quantity desired of economic goods (or services) exceeds the quantity available.
Scarcity
Which of the following describes the concept of rational self-interest?
Individuals look for and pursue opportunities to increase their utility or level of personal satisfaction
Individuals allocate their resources to maximize their satisfaction
Individuals weigh the costs and benefits of their decisions
The trade deficit between the U.S. and China grew between 2000 and 2009
Example of Macroeconomics
Recently, Chase Bank lowered its interest rate on business loans by 2 percentage points
Example of Microeconomics
The real GDP for the United States grew by 2.2 percent in 2007
Example of Macroeconomics
An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise.
Example of Microeconomics
The Consumer Price Index (CPI) rose by 3 percent in 2007
Example of Macroeconomics
A U.S. software film laid off 15 workers last month and transferred the work to India
Example of Microeconomics
True or false: 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
__________ is the discipline of economics concerned with individual units such as a person, household, firm or industry.
Microeconomics
The branch of economics that studies the economy as a whole or in the aggregate is known as:
Macroeconomics
The economic question of "__________ to produce" is about decisions related to the mix (quantity and type) of goods and services to make available in a given economy
what to produce
Which of the following are all possible because of private property rights in a market system?
Economic growth
Exchange
Maintenance of property
Innovation
Investment
An _______ outcome is one each individual affected is treated fairly
Equitable
Economics assumes that human behavior reflects "_______ self-interest.
Rational self-interest
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, there is:
A cost borne by society in utilizing these resources to produce any good or service.
No free lunch.
In economics, an incremental or gradual change is also known as a _________
marginal change
Which of the following define positive economics
Statements based on facts empirical cause and effect relationships
Measurable or scientific statements about economic behavior
Normative Economics is
based on subjective or value judgements
Economics is a ________ science concerned with the allocation of __________ resources to meet the unlimited wants of the members of a given society
SOCIAL science concerned with the allocation of SCARCE
Consumers derive personal satisfaction from goods and services by
Allocating their time, energy, money and other resources so as to maximize their satisfaction from consuming these goods
Acting in their own self interest
The economic decisions of different individuals are considered to be rational when these individuals:
compare benefits and costs
_______ economics focuses on facts and cause and effect relationships.
Positive
In macroeconomics, an ________ is a collection of specific economic units treated as if they were one unit.
aggregate
Private property rights, coupled with the freedom to negotiate binding legal _______ enables individuals and businesses to obtain, use and dispose of property resources as they see fit.
contracts
_______ economic analysis concerns what is, whereas ___________ economic analysis represent subjective statements about what ought to be.
Positive, normative
Which of the following describe the role of government in the United States' form of capitalism?
Provides certain goods and services that would otherwise be underproduced or not produced at all
Modifies the distribution of income
Promotes economics stability and growth
Provides the rules for economic activity
When consumers purchase a good or service, they do so in order to _______ their level of utility or well being
increase
Because consumers behave in a rationally self-interested manner, the consumer will purchase a good or service:
when the marginal benefit is greater than or equal to the marginal cost
The economic perspective focuses on _________ therefore the decision maker must compare incremental benefits and costs.
Marginal analysis
Private property helps to facilitate exchange in which type of economic system?
Free market system
Which of the following are economic measures are considered in macroeconomic analysis?
The level of prices in the economy
The unemployment rate
International trade
National income
Property rights encourage:
exchange
maintenance of property
innovation
economic growth
investment
True or false: Positive economics encourages value judgements.
False
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
Which of the following are issues most explored in microeconomics?
Measuring the price of specific goods
The expenditures of a government entity
A firms decision to hire more workers
Measuring total revenues of a firm or household
Which of the following statements or questions represent positive economics?
The unemployment rate in Mexico is higher than in the U.S.
As the price of airfare falls, airlines experience a spike in business
If the government increases the minimum wage, the unemployment rate will rise
When individuals take into account the costs and benefits of their economic decisions, these decisions are considered to be_________.
rational
Which of the following statements or questions represent normative economics?
The government ought to ball out distressed banks
Cable companies should merge because they result in more competitive pricing
What should the Federal minimum wage be?
The government should increase the minimum wage.
Positive economics is concerned with _________, whereas normative economics deals with __________.
What is, what should be
Which of the following define ceteris paribus?
The idea that factors other than those being considered in a particular analysis do not change
Other-things-equal assumption
In the type of capitalism practiced in the U.S. and most other countries, the government plays __________ role.
a substantial
In economics, the term __________ describes spending that pays for the production and accumulation of capital goods.
investment
The factors of production include:
Land
Labor
Capital
Entrepreneurship
In addition to entrepreneurship, the factor of production (resources) defined as ___________ consists of the physical actions and mental activities that people contribute to the production of goods and services.
Labor
The situation where one thing has to be given up in order to have some other item is called a:
A trade-off
Factories, storage, transportation and distribution facilities, as well as tools and machinery are all examples of physical ____________ goods.
capital
From an economic standpoint______ including all natural resources used in the production process
land
Combinations of goods that fall on the production possible curve:
are attainable
utilize all of an economies resources
are efficiently produced
represent economic growth
A production possibilities curve (frontier) shows the attainable combination:
of two goods that can be produced given a specific set of resources
Capital goods differ from consumer goods in that:
capital goods satifsy consumer wants indirectly through the production of consumer goods
consumer goods satisfy wants directly
Arable land, water machinery and professional baseball player are all considered scarce economic __________ to production.
inputs
Combinations of output that fall inside the production possibilities curve represent:
Less total output in an economy
Goods that are attainable
Inefficient use of resources
Select all choices from the following that would be considered land to an economist
Forests
Oil and mineral deposits
Arable Land
Sunlight
Water
Points lying _______ the production possibilities curve (frontier) would represent a greater but unachievable level of output than that at any point on the curve
outside
Constant opportunity cost is best represented by:
The straight-line production possibilities
As individuals', incomes rise, they will still be confronted with which of the following?
Choices
Opportunity Cost
Trade-offs
Points_______ the production possibilities curve are attainable so long as an economy uses all of its available resources.
Along
A nations production possibilities curve (frontier) can shift outward:
As a result of specialization and trade
With an increase in the quality and quantity of resources
Through the use of improved production techniques
In economics, investment describes spending:
that pays for production and accumulation of capital goods
What does each point on a production possibility represent?
Efficiency in production
The maximum potential output of two or more products
Points lying _______ the production possibilities curve (frontier) are unattainable with the current availability of resources and technology.
outside
Which of the following best describes the relationship between trade-offs and opportunity costs?
As you give up consumption or production of one good over another, an opportunity cost is incurred.
The importance of the production possibilities model is to show the different combinations of goods and services that society can produce:
Given a fixed amount of resources
Inefficiently
Efficiently
In a fully employed economy
Specialization is about an individual or firm using available resources to:
Produce one or only a few goods and services
The law of increasing opportunity is driven by:
resources that are not equally productive in the production of different goods or interchangeable
As more and more of a particular good is produced, which of the following rises?
Opportunity costs
Trade-offs arising from limited incomes give rise to:
Opportunity costs
Economists do not include money as a factor of production because:
Money is a medium of exchange rather than an input to the production of goods and services
Which of the following best represents the relationship between a capital good and a consumer good or service?
A commercial baking oven and loaves of bread