Econ Pre Test 1 – Flashcards

Scarcity exists because human wants exceed the resources available to satisfy them.

Economics studies how we make choices in the face of scarcity.

The reason that all economic issues and problems occur is because, Human wants exceed the resources available to satisfy them.

Economics is the social science that studies how people make choices to cope with scarcity.

Microeconomics includes the study of the, choices made by individuals and businesses.

A topic studied in macroeconomics, is the effect on economic growth if the government raises taxes

When Ford decides to increase production of hybrid cars, it directly answers the "what" question

When the power company decides to use manpower to bury its lines, it directly answers the _HOW_ question.

For whom will healthcare be produced?

Choices that are best for the individuals that make them are choices in pursuit of "self-interest."

Choices that are best for the society as a whole are choices in pursuit of "the social interest."

Rational Choice is NOT the same for all individuals.

Economists measure opportunity cost as the best thing given up.

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's opportunity cost of attending the review session is the $10 he could have earned at his job.

Mothers Against Drunk Drivers (MADD) campaigned to increase the legal penalties of drunk driving. This successful campaign *increased the marginal cost* of drunk driving.

Decision making on the margin involves comparing the marginal cost and marginal benefits when making a decision. Answers: eliminating the additional cost when making a decision.

The decision to go to graduate school is a rational one for a college student if the marginal benefit of graduate school exceeds the marginal cost.

a reward or a penalty that encourages or discourages an action.

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.

The statement that "increases in the tax on gasoline increase the price of gasoline" is an example of a positive statement.

B and C. B. describe how the world ought to be. C. depend on people's values and cannot be tested.

A statement that "All children should receive free health care" is an example of a normative statement

In economics and philosophy, a normative statement expresses a value judgment about whether a situation is subjectively desirable or undesirable. It looks at the world as it "should" be.

A natural experiment is an empirical study in which individuals (or clusters of individuals) exposed to the experimental and control conditions are determined by nature or by other factors outside the control of the investigators, yet the process governing the exposures arguably resembles random assignment.

It means to think about your next step forward. The word "marginal" means "additional." The first glass of lemonade on a hot day quenches your thirst, but the next glass, maybe not so much. If you think at the margin, you are thinking about what the next or additional action means for you.

Positive economics is objective and fact based, while normative economics is subjective and value based. Positive economic statements do not have to be correct, but they must be able to be tested and proved or disproved.

Opportunity cost is best defined as the value of the highest-valued alternative that is forgone in making a choice.

A graph of the value of one variable against the value of another variable is known as a scatter diagram.

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.

Trend refers to, a general tendency for a variable to rise or fall.

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

Demonstrating how an economic variable changes from one year to the next is best illustrated by a, time-series graph.

To show the values of an economic variable for different groups in a population at a point in time, it is best to use a, cross-section graph

If the change in y = 10 and the change in x = 3, there is a positive relationship between y and x.

If x increases and as a result y decreases, then x and y are, negatively related

If two variables are unrelated, their graph is either a horizontal or a vertical line.

If a curve rises and then falls, it has a maximum.

If a curve falls and then rises, it has a minimum.

If a curve falls and then rises, it has a minimum.

If the quantity of the variable on the y-axis increases by 10 when the quantity of the variable on the x-axis decreases by 2, then the slope of the curve equals "-5."

-1.

3/4.

-1.25.

The Latin term "ceteris paribus" means "other things remaining the same."