Ch.1 MicroEcon

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Which of the following is a positive economic statement?
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The minimum wage law causes unemployment
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Allocative efficiency best explains_______and productive efficiency best explains________.
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what will be produced/how something will be produced
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Which of the following is a problem inherent in centrally planned economies?
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Production managers are more concerned with satisfying government’s orders than with satisfying consumer wants.
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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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Consumers and firms choosing which goods and services to buy or produce.
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Economic models
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Are simplified versions of reality
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Which of the following is a macroeconomics question?
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What determines the growth rate of gross domestic product
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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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marginal benefit equals the marginal cost
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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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Marginal revenue
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Scarcity refers to the situation where
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Unlimited wants exceed limited resources
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_________ increases economic efficiency because it forces firms to produce and sell goods and services as long as the additional benefit to consumers is greater than the additional cost of production.
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Competition
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Which of the following is a macroeconomics question?
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What determines inflation rate?
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Which of the following is a microeconomics question?
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What factors determine the price of carrots?
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Which of the following is a normative economic statement?
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The price of gasoline is too high.
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Microeconomics is the study of
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How households and firms make choices
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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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model
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The three fundamental questions that any economy must address are
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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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Every society faces economic trade-offs. This means
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Producing more of one good means less of another good can be produced.
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By definition, economics is the study of
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The choices people make to attain their goals, given their scarce resources
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Opportunity cost is defined as
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The highest valued alternative that must be given up to engage in an activity
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Consider the following economic agents: the government, consumers, and producers. 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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The government
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Economics is the study of the ________ people make to attain their goals, given their _____ resources.
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Choices; scarce
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Which of the following correctly describes the relationship between economic efficiency and economic equity?
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There is often a trade-off between the two.
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In a market economy, those who are willing and able to buy what is produced
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Receive the most of what is produced
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The branch of economics which studies the behaviors of entire economies is called
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Macroeconomics
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_____________ is a situation in which a good or service is produced at the lowest possible cost.
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Productive Efficiency

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