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microeconomics midterm ch 1-3
Terms in this set (57)
Scarcity exists because
human wants exceed the resources available to satisfy them
scarcity requires that we
make choices about what goods and services to produce
which of the following statements best describes the study of economics? economics studies how
we make choices in the face of scarcity
microeconomics includes the study of the
choices made by individuals and businesses
which of the following is a microeconomics issue? the price of gasoline increases in the united states this year, the US government cuts taxes to combat a recession, the unemployment rate soars in spain, inflation skyrockets in russia
The price of gasoline increases in the United States this year.
which of the following is a microeconomic topic? kmarts decision to close stores that are not making a profit, home depot's choice to hire more full-time employees bc it's sales increased, delta airlines changed its fares
Macroeconomics is the study of
national or global economies
which of the following best describes macroeconomics
it analyzes the aggregate effects on the national economy of the choices made by individuals, firms, and govs
which of the following is a macro topic? china increases interest rates to slow its economic growth, congress lowers tax rates to try and lower the unemployment rate, nissan decides to produce more electric Leaf models and fewer altima sedans
china increases interest rates to slow its economic growth, congress lowers tax rates to try and lower the unemployment rate
of the three major economic questions, which of the following is the best example of a what question? should cars be produced using workers or robots, what should doctors be paid, Should we make faster microprocessors or pest-resistant corn, should migrant workers or domestic workers be used to pick grapes, should higher income or lower income ppl buy suvs
Should we make faster microprocessors or pest-resistant corn?
When Delta decides to quit flying to Lithuania, it directly answers the ________ question.
When Fresh Express Salads decides to mechanically pick all of its lettuce it directly answers the ________ question.
the question of "how are goods and services produced?" most clearly addresses which of the following issues? is income distributed fairly in the us, should fort build suvs or luxury cars, should for use expensive industrial robots or inexpensive mexican autoworkers to produce suvs, why are christmas trees popular only in december, should contractors build residential housing or shopping malls
should ford use expensive industrial robots or inexpensive mexican autoworkers to produce suvs
which economic question depends on the incomes that ppl earn and the prices they pay for goods and services
When a third string NFL quarterback earns more than a police officer, society answers the ________ question.
Canada has nationalized health care, so that everyone, regardless of their ability to pay, has some access to health care. Based on this observation, Canada has decided that "everyone, regardless of their ability to pay" is the answer to what microeconomic question?
For whom will health care be produced?
reflects choices that are best for the individual who makes them
If a decision is made and it is the best choice for society, the decision is said to be
made in social interest
a rational choice is one that
uses the available resources to most effectively satisfy the wants of the person making the choice.
what is not true about rational choice
It is the same for all individuals
In economics, cost is measured as ________, and benefit is measured as ________.
what you must give up to get something; what you are willing to give up to get it
An opportunity cost is
the benefits of the highest-valued alternative forgone
If Jessie studies economics for two hours instead of going to the movies with her friends, then
the opportunity cost of studying is the missed movie.
Ali decides to attend the one-hour review session for microeconomics instead of working at his job. His job pays him $10 per hour. Ali's opportunity cost of attending the review session is
the $10 he could have earned at his job.
the benefit from a good or service that you purchase is measured by
what you are willing to give up to obtain the good or service
the cost of a one unit increase in an activity is called the
the marginal cost of an activity _______ as you do more of it
A professor changes the penalty for cheating on exams from getting a 0 on the exam to getting an F in the course. The professor has
increased the marginal cost of cheating
the benefit of a one unit increase in an activity
decreases as you do more of it
suppose that you eat two hamburgers for lunch. the marginal benefit of the first burger is _______ of the second burger
larger than the marginal benefit
decision making on the margin involves
comparing the marginal cost and marginal benefits when making a decision.
instead of studying for an additional two hours for the economics final, Leann decides to watch a movie Leann is making
a rational decision if her marginal benefit from the movie is greater than her marginal cost.
Your economics professor offers 10 points extra credit if you attend a review session before your next exam. This extra credit is an example of
an incentive to attend the review session.
In examining two variables, we find that as one variable changes, the other changes. These variables are said to be
which of the following does a positive statement do: makes a statement about how the world operates, is a true statement, can be tested against the facts
makes a statement about how the world operates, can be tested against the facts
"lower ticket prices would lead to more people attending ballgames" this statement is a
describe how the world ought to be, depend on ppls values and cannot be tested
a statement that "all children should receive free healthcare" is an example of what kind of statement?
a normative statement
a scatter diagram can be used to see
if a relationship exists between two variables.
a time series graph
shows how a variable changes over time
A steep slope in a time series graph means the variable is
rising or falling quickly
a time series graph reveals whether there is a ________ which represents _________
trend in a variable; a general tendency for the variable to rise or fall
a cross section graph
shows the values of an economic variable for different groups in a population at a point in time
a graph shows the average wage of various demographic groups in 2012. the kind of graph used to show these data would be a
cross section graph
if two variables are positively related then
they move in the same direction
if x increase and as a result y decreases, then x and y are
if the change in y= -4 and the change in x= 2, there is
a negative relationship between y and x
if two variables are unrelated, their graph is
either a horizontal or a vertical line.
a graph shows the price of a pound of cucumbers on the vertical axis and the quantity of new cars sold by honda on the horizontal. the price of a pound of cucumbers remains constant as the quantity of new cars sold increases. the graph of these data is a
which of the following statements is the best example of the term ceteris paribus
An economist holds other factors constant when he examines the relationship between tax rates and tax revenues.
which of the following is a consumption good or service? a united airline ticket counter, a satellite dish installed by cox cable to download programs that are then distributed thru its cable system, the endeavor space shuttle, a united parcel service truck delivering Christmas gifts, a personal computer purchased in order to play games at home
a personal computer purchased in order to play games at home
the difference between consumption goods and capital goods is that
capital goods are used to produce additional gods while consumption goods are not
computers and insurance coverage produced in the United States and sold to people in other nations are categorized as
us exports of goods and services
goods and services are produced by using four factors of production:
land, labor, capital, and entrepreneurship
the United States possesses a large amount of human capital. as a result of this fact, in the us there is a
highly skilled and educated labor force
One of the productive resources is capital. Capital includes
tools, buildings, and machine tools
according to the functional distribution of income, in the us
labor earns most of the income
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