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how society manages its scarce resources.

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Economics is best described as the study of?

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people face trade-offs

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While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that

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equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources.

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The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that

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Senator Green's argument is primarily about efficiency, while Senator Brown's argument is primarily about equality.

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Senator Green argues that replacing the income tax with a national sales tax would increase the level of output. Senator Brown objects that this policy would benefit the rich at the expense of the poor.

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what you give up to get that item

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The opportunity cost of an item is

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marginal benefit is greater than the marginal cost.

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A rational decision maker takes an action only if the

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incentives..

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Economists are particularly adept at understanding that people respond to

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alter incentive alter trade-offs change opportunity costs

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Which of the following can policy do?

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to produce enough to meet the output target, without regard for quality or cost

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In the former Soviet Union, producers were paid for meeting output targets, not for selling products. Under those circumstances, what were the economic incentives for producers?

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People respond to incentives.

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According to a recent study of Chilean bus drivers, drivers who are paid by the number of passengers they transport have higher productivity than drivers who are paid by the hour. This result is an example of which principle of economics?

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increase both competition and specialization.

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Trade between countries tends to

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both the values that society places on those products and the costs to society of producing those products.

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When the "invisible hand" of the marketplace guides economic activity, prices of products reflect

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The government should increase the tax on gasoline.

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Which of the following is an example of a normative - as opposed to a positive - statement?

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claims about how the world is.

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Positive statements are

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prescriptive, whereas positive statements are descriptive.

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Normative statements are

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the impact of minimum-wage laws on employment in the fast food industry

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Which of the following areas of study typifies microeconomics as opposed to macroeconomics?

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more of one good must be given up to receive one unit of the other good. the available production technology does not change the opportunity cost increases.

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On a bowed production possibilities frontier, as you move down along the curve

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people face trade-offs.

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The production possibilities frontier provides an illustration of the principle that

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there is no way to produce more of one good without producing less of another good.

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If an economy is producing efficiently, then

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can produce using all available resources and technology.

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Any point on a country's production possibilities frontier represents a combination of two goods that an economy

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used to produce goods and services.

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Factors of production are

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simplification of reality.

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A model can be accurately described as a

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lower unemployment and higher inflation.

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In the short run, an increase in the money supply is likely to lead to

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externalities and market power

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Causes of market failure include

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market failure.

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The term used to describe a situation in which markets do not allocate resources efficiently is

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make a complex world easier to understand.

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Economists make assumptions to

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sometimes make different assumptions about the short run and the long run.

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When studying the effects of public policy changes, economists

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price takers.

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Buyers and sellers who have no influence on market price are referred to as

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are so many buyers and so many sellers that each has a negligible impact on the price of the product.

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A competitive market is one in which there

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a local cable television company

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would most likely serve as an example of a monopoly

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shifted to the left.

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When quantity demanded decreases at every possible price, the demand curve has

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Public service announcements run on television encourage people to walk or ride bicycles instead of driving cars.

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Which of the following events could shift the demand curve for gasoline to the left

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market-clearing price.

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Another term for equilibrium price is

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demand and supply both decrease

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events must cause equilibrium quantity to fall

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decrease in the demand for printers and a decrease in the quantity supplied of printers.

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Suppose buyers of computers and printers regard the two goods as complements. Then an increase in the price of computers will cause a(n)

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a decrease in the price of wool shirts and a decrease in the price of raw cotton

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Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts

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Elasticity allows us to analyze supply and demand with greater precision than would be the case in the absence of the elasticity concept.

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How does the concept of elasticity allow us to improve upon our understanding of supply and demand?

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40 percent decrease in the quantity demanded.

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If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price results in a

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Buyers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling.

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Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

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to fall and quantity demanded to rise.

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In the short run, rent control causes the quantity supplied

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sellers to supply a smaller quantity at every price. buyers to demand a smaller quantity at every price.

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A tax on the sellers of cameras encourages

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results in a movement downward and to the right along a demand curve.

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An increase in quantity demanded

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give producers an incentive to produce more.

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An increase in the price of a good would

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results in a movement downward and to the left along a fixed supply curve.

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A decrease in quantity supplied

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is computed as the percentage change in quantity demanded divided by the percentage change in price

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The price elasticity of demand

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it is not binding

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when the price ceiling is above the equilibrium

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it is binding

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when the price ceiling is below the equilibrium

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it is binding

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when the price floor is above

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its not binding

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when the price floor is below

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the amount paid by buyers and received by sellers of a good : computed as the price of the good times the quantity sold

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total revenue

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tax incidence

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the manner in which the burden of a tax is shared among participants in a market

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cost

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the value of everything a seller must give up to produce a good

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producer surplus

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the amount a seller is paid for a good minus the sellers cost of providing

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maximizing the total surplus received by all members in the society is efficiency. distributing uniformly economic prosperity to all members in the society is equality

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efficiency v.s. equality

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other things equal, the quantity of good falls, when the price of the good rises

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law of demand

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other things equal, the quantity supply of a good rises when the price of a good rises

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law of supply

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magnitude of the effect on the market.

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When studying how some event or policy affects a market, elasticity provides information on the

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sampling error

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is the difference between measurement from a sample and corresponding measurement from the respective population. it is caused by the fact that the sample does not perfectly represent the population

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non sampling error

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is the result of poor sample design, sloppy data , faulty measurements instruments, bias in questions.

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Statistics

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is the study of how to collect, organize, analyze, and interpret numerical information from data.

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population parameter

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describes an aspect of a population

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sample statistic

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describes an aspect of a sample

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individuals

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the people or objects included in the study

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variable

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characteristics of the individual to be ,measured or observed

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quantitative variable

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has a value or numerical measurement for which operations such as average or addition make sense

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qualitative variable

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describes an individual by placing the individual into a category or group, such as male or female

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population data

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the data are from every individual of interest

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sample statistics

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is a numerical measurement that describes an aspect of a sample

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nominal level of measurement

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data that consist of names, labels, or categories.

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ordinal level of measurement

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data that can be arranged in order but the difference between data value can not be determined

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interval level of measurement

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data that can be arranged in order and the difference between data are meaningful

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ratio level of measurement

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data that can be arranged in order in addition both difference between data value and rations of data are meaningful

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descriptive statistics

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methods of organizing, picturing, and summarizing information from sample or population

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inferential statistics

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methods of using information from a sample to draw conclusions regarding the population

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simple random sample

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"n" a measurement from a population has an equal chance of being selected

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simulation

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is a representation of a real-world phenomenon

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random sampling

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use a simple random sample from the entire population

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stratified sampling

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divide the population into subgroups called: strata. all members of stratum share specific characteristics such as sex education age income ect.

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systematic sampling

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number all members of the population sequentially. then from the starting point select at random

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cluster sampling

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divide the entire population into per-exsting segments or clusters. the clusters are often geographical. every member of the cluster is included in the sample

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multistage sampling

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create smaller groups at each stage . the final sample consist of clusters

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convenience sampling

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create a sample by using data from population members that are readily available

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sampling frame

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is a list of individuals from which a sample is actually selected

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undercoverage

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results from omitting ( not included in the study) population members from the sample frame

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sample

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measurement or observation from part of the population are used

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experiment

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a treatment is deliberately imposed on the individuals in the order to observe a possible change in the response or a variable being measured

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