Macroeconomics review 1 – Flashcards
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What goods and services to produce; how will these goods and services be produced; and who receives them?
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The three fundamental questions that any economy must address are:
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rationally
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Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________, meaning they make the best decisions given their knowledge of the costs and benefits.
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market
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The term ________ in economics refers to a group of buyers and sellers of a product and the arrangement by which they cometogethertotrade.
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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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whether is should produce more of its product
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Which of the following is not an example of an economic trade-off that a firm has to make?
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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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opportunity cost
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The highest valued alternative that must be given up to engage in an activity is the definition of
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people are rational
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Suppose that some teachers have decided that economic and financial uncertainty have made the prospect of retiring more risky, and therefore carry a higher cost than not retiring. By using all available information as they act to achieve their goals, these teachers are exemplifying the economic idea that
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are rational and respond to incentives
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Economists assume that individuals
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Economic resources are also called factors of production
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Which of the following statements about economic resources is true?
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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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the government
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Consider the following economic agents:
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the government
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Who, in a centrally planned economy, decides what goods and services will be produced with the scarce resources available in that economy?
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portray reality in all its minute details
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Economic models do all of the following except
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Opinion
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Which of the following is a normative economic statement?
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even though people may not behave rationally all the time
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Economists assume that rational behavior is useful in explaining choices people make
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marginal cost
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The extra cost associated with undertaking an activity is called
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the government decides because North Korea is a centrally planned economy
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How are the fundamental economic decisions determined in North Korea?
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marginal revenue
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A grocery store sells a bag of potatoes at a fixed price of $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?
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trade-off
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The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of
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What factors determine the price of carrots?
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Which of the following is a microeconomics question?
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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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Medical students who enter specialized fields make a larger contribution to society than do student who enter primary care
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Which of the following questions or statements regarding medical school is normative?
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until its marginal benefits equal marginal costs
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Marginal analysis involves undertaking an activity
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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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there is a negative relationship between laptop prices and the quantities purchased by college students
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Suppose when the price of laptops fall, college students buy more laptops. This implies that
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weighing the costs and benefits of a decision before deciding if it should deb pursued
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Making optimal decisions "at the margin" requires
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Scarcity refers to the situation in which unlimited wants exceed limited resources
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Which of the following statements is true about scarcity?
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Soo Jin figured that the additional benefit of having her own place(as opposed to sharing) is at least 250$
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Soo Jin shares a one-bedroom apartment with her classmate. Her share of the rent is $700 per month. She is considering moving to a studio apartment which she will not have to share with anyone. The studio apartment rents for $950 per month. Recently, you ran into Soo Jin on campus and she tells you that she has moved into the studio apartment. Soo Jin is as rational as any other person. As an economics major, you rightly conclude that
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the economy as a whole
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Macroeconomics is the study of
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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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market
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An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue.
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If the price of iPhones falls, a larger quantity of iPhones will be purchased
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Which of the following is a positive economic statement?
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how households and firms make choices
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Microeconomics is the study of
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allocative efficiency
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When production reflects consumer preferences, ________ occurs.
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marginal
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In economics, the term ________ means "additional" or "extra."
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as long as the marginal benefit she receives is just equal to or greater than $200
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If the marginal cost of keeping a doctor's office open one additional hour per day is $200, then the doctor should keep the office open for one extra hour
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What to produce?
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Automobile manufacturers produce a range of automobiles such as sports utility vehicles, luxury sedans, pickup trucks and compact cars. What fundamental economic question are they addressing by making this range of products?
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scarcity
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The basic economic problem of ________ has always existed and will continue to exist.
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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? 48) ______
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scarcity
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In economics, choices must be made because we live in a world of
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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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A straight line has a slope of zero
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Which of the following statements is false?
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Opinions
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All of the following are part of an economic model except
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Every individual, no matter how rich or poor, is faced with making trade-offs
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Which of the following statements is true?
