CH 1 – Flashcards
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A resource is something that
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is used to produce goods and services
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Economics is best defined as the study of how
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individuals decide to use scarce resources in an attempt to satisfy their unlimited wants
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In economics, capital is defined as
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human creations used in the production process
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Goods and services are exchanged in
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product markets
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A market
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a. is often a physical place b. facilitates exchanges between buyers and sellers c. typically involves monetary transactions d. might not have well-defined geographical limits
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Households
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own and sell resources
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The labor market is an example of a
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resource market
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A rational decision maker will take only those actions for which the expected marginal benefit
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is greater than or equal to the expected marginal cost
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Microeconomics is the study of
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the economic behavior of individual decision makers
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Normative economic statements refer to what should be.
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True
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"There should be less discrimination against women" is an example of a positive statement.
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False
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An example of a positive economic statement is, "An increase in the price of a product causes consumers to purchase more of that product."
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True
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Which of the following is an example of a positive statement?
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An increase in the price of gasoline will cause a reduction in the amount purchased
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A normative economic statement
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is a statement of what ought to be, not what is
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The difference between positive economic statements and normative economic statements is that
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positive statements are based on fact while normative statements are based on opinion
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One might commit the fallacy of composition by concluding that
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what is good for the individual is necessarily good for the group
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In a circular-flow model, households supply all of the following except
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goods and services
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Rational self-interest is equivalent to pure selfishness
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False
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Which of the following would be a topic considered in the field of macroeconomics?
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Studying the amazing recent growth of the Chinese economy.
