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Econ Test 1
Terms in this set (70)
Analysis that concerns itself with the next choice describes which of the following?
Research that attempts to explain economic phenomena using numerical values and graphs is called:
A simplified model that does not reflect reality but is useful to demonstrate a concept is called a(n):
Which of the following is an economic theory that is accepted by all or nearly all economists?
Which of the following is the assumption that nothing changes other than the two variables being measured?
A hypothesis is:
an untested prediction of what will cause some event given certain assumptions
The variable usually measured on a vertical axis and whose value may be determined by another variable is called the:
As the independent variable increases, the dependent variable increases. This is a(n):
positive relation and direct relation
The rate that the dependent variable changes for each change of one unit of the independent variable is called:
when the independent variable is related to the dependent variable, but where they may be coincidental or both caused by a third variable
Uncertainty reflects an event that:
may occur or change but cannot be quantified efficiently
Assuming that whatever is good for one must be good for all is the fallacy of:
When economists speak of alternative uses, they are including which of the following?
Needs, wants , preferences
The economic problem may be best stated as which of the following?
wants are greater than resources available to fulfill them
Economic improvement is defined as the ability to:
make any person better off without making at least one other person worse off
Which of the following would economists consider to be rational or efficient behavior?
choices that increase expected additional benefits more than expected additional costs
A measure of utility gained by society through the production, acquisition, and consumption of goods is called:
Anything that improves an individual's or group's condition is called a:
The costs incurred by consuming an additional unit of a specific good is called:
The utility gained from continued consumption of a specific good is called:
When zero utility can be gained from consuming one more unit of a specific good no matter the cost, a consumer has reached a:
When the utility gained from the next unit consumed of a specific good is less than before, the good is said to have:
diminishing marginal utility
The value of the next best alternative to whatever is chosen is called:
An economic model that shows how total utility is limited by income and trade-offs is called:
The first law of demand states that if nothing else changes,
the quantity demanded of a good increases when its price falls and decreases when the price rises
If demand decreases at any given price due to a winter storm in the northeast, the region has experienced a:
shift in demand
A gain in the welfare realized by consumers when they are able to purchase a product for a price that is less than the highest price some would be willing to pay is called
In a world of scarcity and uncertainty, utility is maximized. This is a summary of the
Making a person or a group better off while making at least one individual worse off would suggest that the economy has reached a point of
The generally accepted idea that adding additional resources may not increase production at a steady rate is known as
law of diminishing returns
Which of the following has the greatest influence on voluntary, private exchanges?
Separating production into small tasks that encourages cooperation, repetition, and competence is best summarized as
division of labor; specialization of labor
Gains can be achieved as workers repeat a task and gain competence. The economic model that illustrates this concept is
An individual or group that is more productive than another at any given task is said to have a(n)
Which of the following suggests that everyone should specialize in the task that gives the greatest comparative advantage?
law of comparative advantage
A graph that shows different combinations of goods that may be produced given available resources is called
production possibilities curve
A combination of goods that cannot be produced even if no available resources are idle is said to be
An economy that produces the combination of goods demanded has reached a point of
Costs that have already been incurred should not influence future choices. This is called
Households that accumulate tools for their own production and profit are increasing their
The amount a seller is willing and able to sell over a range of given prices is called
The quantity supplied of a good increasing as its price rises can be shown by which of the following?
movement along a supply curve
The solution to the producer problem of scarcity and uncertainty is to maximize profit. Assuming that producers will always attempt to maximize profit is stated by a
Placing a limit on the amount of goods exchanged with another country or economy is called
What is a ratio of values for one good compared to another?
The point where quantity demanded equals quantity supplied is called
Which of the following is the price where the amount demanded equals the amount supplied?
When the quantity demanded exceeds the quantity supplied the market faces a ________.
When an authority outside of the market imposes a limit that no price is allowed to vary above is a:
Increasing pricing too much becomes illegal under which of the following laws?
If the quantity demanded of a good increases as buyers earn more real income, then the good is a:
Which of the following statements is incorrect?
The price of a good depends on the quantity demanded of the good.
The quantity demanded of a product depends on its price.
The quantity supplied of a product depends on its price
All of these statements are correct.
When either variable has a large response to a change in the other variable, the comparison is
If a company is forced to increase price and their total revenue rises as a result, then demand is
If the absolute value is calculated to be less than one, then the responsiveness is called
Which of the following demand curves experiences an equal and offsetting change for any price increase anywhere along the demand curve?
unit-elastic demand curve
Which of the following measures how responsive demand is to a change in income?
income elasticity of demand
Which of the following will have a negative value for a calculated elasticity?
Which of the following is not income elastic?
Which of the following is used to measure the responsiveness between complements and substitutes?
cross-price elasticity of demand
When there is no difference in information or opinions between buyers and sellers the market has
The inability of buyers and sellers to recognize, incorporate, and act on large amounts of information is called
When there is very little information available about small firms, they are said to be:
A promise to fix or replace the good for a certain period of time can reduce the cost of uncertainty about a seller or a good. This promise is called a
Certain firms and professionals are required to submit proof of education or pass specific tests before they are allowed to perform a service or sell a product. The document issued by government that allows them to work is called a
When an executive officer's decisions benefit himself rather than his firm's owners, which of the following has occurred?
Individuals who have a tendency to default are usually more willing to pay high interest rates and thus get loans. This describes an example of
An amount policyholders must pay out of their own pocket before an insurer pays anything may reduce the problem of moral hazard. This payment is called a:
People can throw their trash in a dumpster that they did not pay to maintain. This is an example of the
free rider problem
Ongoing attempts by a bank to stay informed about a loan may reduce the problems of moral hazard and asymmetric information. These attempts are part of which of the following processes?
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