Flashcards To Learn Econ Test 1
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in all decision making
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Economic analysis is used
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aids all decision making
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Economic analysis is a tool that
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limited; unlimited
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Economics can be described as the study of how people use ______ resources to satisfy _________ wants.
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people make choices
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Economics is the study of how
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how people allocate their limited resources to satisfy their unlimited wants
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Economics is the study of
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buyers and sellers together
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In a market system, the what, how and for whom questions in economics are determined by
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prices
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In a market system, ____ provide signals about whether resources are relatively scarce or abundant
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contain value judgments
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Normative economic statements
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is objective
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Positive economics
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the rationality assumption
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The assumption that people do not intentionally make decisions that would leave them worse off is known as
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command and control
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What is the type of economic system that relies on one central authority to make economic decisions?
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no economic model captures every detail that affects a problem
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Which of the following statements is true? (economic models)
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Economics is the study of how people make choices to satisfy their wants.
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Which statement most accurately defines economics?
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both material and nonmaterial desires
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"Wants" as an economic concept includes
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unemployed resources
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A country operates inside its production possibilities curve; this may be caused by
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a constant opportunity cost between the two goods
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A straight-line production possibilities curve has
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(3) a decline in the unemployment rate
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All of the following would cause the production possibilities curve to shift outward EXCEPT: (1) an improvement in technology (2) an increase in the amount of labor available (3) a decline in the unemployment rate (4) an increase in the level of capital stock
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producing the maximum output with given technology and resources
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Efficiency can correctly be defined as
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less of all goods may be produced in the future
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Generally, if a nation produces more consumer goods than capital goods
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the value of the next-best alternative that must be sacrificed to satisfy a want
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Opportunity cost is
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the inability of society to satisfy all human wants because of limited resources
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Scarcity refers to
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the greater the bow of the production possibilities curve
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Typically, the greater the specialization of resources,
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"I chose the road less traveled."
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Which of the following statements indicates the idea of trade-offs?
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Because limited resources mean all the goods we want cannot be obtained
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Why is it that all of our wants cannot be satisfied?
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a change in quantity supplied
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A change in the price of a good causes
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the supply curve shifts upward to the left
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A decrease in supply will occur when
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indirect or inverse relationship between price and quantity demanded
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A demand curve represents a(n)
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a supply curve
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A direct or positive relationship between price and quantity supplied is
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the product's own price
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A movement along a supply curve is induced by a change in
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the price is below the market clearing level
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A shortage will occur when
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when the price of a good goes up, then people buy less of that good
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According to the law of demand, other things being equal,
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The supply curve shifts downward to the right
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An increase in supply will occur when
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demand decreases as income increases
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An inferior good is one for which
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an inferior good
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If the demand of a good is inversely related to income, it must be
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reduce their per-unit costs of producing the good
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In order to increase the supply of a good, producers must
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a surplus
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A price floor set above a market equilibrium price causes
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market system
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An economic system in which relative prices change to reflect changes in supply and demand for different commodities is known as a
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a quantity restriction
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An import quota is an example of
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a leftward shift in the demand of labor
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An increase in the minimum wage will tend to cause which of the following to occur?
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price supports in order to keep farm incomes high
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Government intervention in agriculture usually involves
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generate a higher price for the good than would prevail under freely competitive markets
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Government-imposed quantity restrictions
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all of these
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Governments may intervene in private markets through
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a price floor
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If the government sets a minimum price at which a good or service can be sold, it thereby creates
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transaction costs
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In a market system, the costs associated with exchanging goods are known as
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must be set above equilibrium price
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In order to be effective, a price floor
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a price floor
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Minimum wages are examples of
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buyers to reduce the amount they want to buy and sellers to increase the amount they are willing to sell
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Other things being equal, a higher price induces
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shortages
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Price ceilings set below the equilibrium price cause
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when rents are set below the market clearing level
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Rent controls are
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resources
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In economics, items that are used to produce goods and services are known as
