Economics Homework 1 – Flashcards
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B) scarcity.
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In economics, choices must be made because we live in a world of
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the choices people make to attain their goals, given their scarce resources.
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By definition, economics is the study of
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in any arena that brings together buyers and sellers
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Where do economic agents such as individuals, firms and nations, interact with each other?
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undertake activities that benefit others and hurt themselves
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Economists assume that rational people do all of the following except
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people respond to economic incentives.
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Suppose the U.S. government encouraged new medical school graduates to take over existing practices from doctors wishing to retire by paying both the new and retiring doctors $100,000. These doctors would be exemplifying the economic idea that
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marginal benefit equals the marginal cost.
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Economists reason that the optimal decision is to continue any activity up to the point where the
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an additional unit
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The revenue received from the sale of ________ of a product is a marginal benefit to the firm.
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$20
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DeShawn's Detailing is a service that details cars at the customers' homes or places of work. DeShawn's cost for a basic detailing package is $40, and he charges $75 for this service. For a total price of $90, DeShawn will also detail the car's engine, a service that adds an additional $20 to the total cost of the package. What is the marginal cost of adding the engine detailing to the basic detailing package
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when some previously unemployed workers find jobs.
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Society faces a trade-off in all of the following situations except
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at least $125,000
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Arlene quits her $125,000-a-year job to take care of her ailing parents. What is the opportunity cost of her decision?
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consumers and firms choosing which goods and services to buy or produce.
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The decision about what goods and services will be produced made in a market economy is made by
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those who are willing and able to buy them
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Who receives the most of what is produced in a market economy?
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firms produce goods and services at the lowest cost.
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Productive efficiency is achieved when
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voluntary exchange
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Which of the following is a result of a market economy?
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Scarcity necessitates that people make trade-offs.
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Which of the following is a positive economic statement?
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What determines the inflation rate?
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Which of the following is a macroeconomics question?
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True
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An economic model is a simplified version of reality used to analyze real-world economic situations.
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False
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One desirable outcome of a market economy is that it leads to a more equitable distribution of income.
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False
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In the market for factors of production, firms earn income by selling goods and services to households.
