50 terms

Economics Test 1

Economics involves marginal analysis because:
Most decisions involve changes from present situation
You should decide to go to a movie
If the marginal benefit of the movie exceeds its marginal cost
Marginal cost exits because:
The decision to engage in one activity means forgoing some other activity
The assertion that "There is no free lunch" means that:
All production involves the use of scarce resources and thus the scarifice of alternative goods
Consumers spend their incomes to get the maximum benefit or satisfaction from the good and services they purchase. This is a refection of:
Purposeful behavior
If someone produced too much of a good, this would suggest that:
The good was produced to the point where its marginal cost exceeded it marginal benefit
Even though local newspapers are very inexpensive, people rarely buy more the one of them each day: This fact:
Implies that, for most people, the marginal benefit of reading a second newspaper is less than the moarginal cost
Indeciding whether to study for an economics quiz or go to a movie, one is confronted by the idea(s) of:
Scarcity and opportunity costs
Which one of the following expressions best states the idea of opportunity cost?
"There is no such thing as a free lunch"
Which one of the following is an economic explanation for why most college-ages movies stars do not attend college.
The opportunity cost in terms of reduced income is too great
Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students. This expample illustrates:
Opportunity costs
Which of the following most closely relates to the idea of opportunity costs?
Economists contend that most economic decisions are:
Alex sees that his neighbors' lawns all need mowing. He offers to provide the service in exchange for a wage of $20 per hour. Some neighbors accept Alex's offer and other refuse. Economists would describe Alexs behavior as:
Rational self-interest, becasue he's attempting to increase his own income by identifying and satisfying someone else's wants
Kara was out jogging and dispite being tired, decided to run one more mile. Based on her actions economists would conclude that Kara:
Decided that the marginal benefit of running one more mile outweighed the cost of the additional mile
An economic hypothesis:
Is a possible explation of cause and effect
Which of the following terms implies the least degree of confidence in an economic generalization?
A hypothesis
Which of the following terms implies the greatest degree of confidence in an economic generalization?
A principle
A well tested economic therory is often called:
A principle
Use both the economic perspective and the scientific method
The scidentific method is:
Used by economists and other social scientists, as well as by physical scientists and life scientists
The process by which economists test hypotheses against facts to develop therories, principles, and models is called:
The scientific method
Economic theories:
Are generalizations based on a careful observation of facts
Which of the following is a correct statement?
Though not quantitatively exact, economic laws are useful because they allow us to predict and therefore control or adjust to events
In constructing models, economists:
Make simplifying assumptions
Economic models:
Emphasize basic economic relationships by purposefully simplifying the complexities of the real world
The term "ceteris paribus" means:
Other things equal
The basic purpose of the other-things-equal assumption is to
Allow one to reason about the relationship between variables X and Y without the intrusion of variable Z
An hypothesis is:
A tentative, untested statement of possible cause and effect
The term "other things equal" means that:
A number of relevant variables are assumed to be constant
Kelly works at an ice cream shop and observes that the number of people buying ice cream varies greatly from day to day. For a couple of weeks she has recorded the number of people at the shop each day, as well as the daily temperature. If Kelly is using the secientific method to better understand ice cream buying habits, her next step is to:
Use the observed datat to form a hypothesis about ice cream buying behavior
Macroexonomics approaches the study of economics from the viewpoint of:
The entire economy
Which of the following is associated with macroeconomics?
An empirical investigation of the general price level and unemployment rates since 1990
Entails the exhange of goods for goods
The coincidence-of-wants problem associated with barter refers to the fact that:
For exhange to occur each seller must have a product that some buyer wants
The use of money contributes to economic efficiency because:
It promotes specialization by overcoming the problems with barter
The presence of market faliures implies that:
There is an acive role for government, even in a market system
Which of the following charateristics is least unique to a market system?
The widespread use of money
Which of the following is one of the Five Fundamental Questions?
What goods and services will be produced?
Which of the following is not an economic cost?
Economic profits
The conomic function of profits losses is to:
Signal that resources should be reallocated
In a competitive economy, prices:
Influence consumer to purchase goods and services, influence buisnesses in their purchases of economic resources, influence workers in makeing occupational choices
If a competitive industry is neither expanding nor contraction, we would expect:
Economic profits to be zero
Suppose industry A is realizing substantial ecnomic profit. Which of the following best describes what will happen in this competitive market?
Firms will ener the industry and output will rise
The competitive market system:
Ecourages innovation because successful innovators are rewarded with economic profits
In a market economy the distribution of output will be determined primarily by:
The quantities and prices of the resources that households supply
The most efficent combination of resources in producing any output is the combination that:
Can be obstained for the smallest money outlay
The market system's answer to the fundamental question"What will be produced?" is essentially:
"Goods and serives that are profitable"
The market system's answer to the fundamental question "How will the good and services be produceds?" is essentially:
"With as much machinery as possible"
The market system's ansewr to the fundamental question "Who will get the goods and services" is essentially:
"Those willing and able to pay for them"