Chap 1.

1. A resource is something that
is used to produce goods and services
2. Economics is best defined as the study of how
individuals decide to use scarce resources in an attempt to satisfy their unlimited wants
3. In economics, capital is defined as
human creations used in the production process
4. Goods and services are exchanged in
product markets
5. A market
– is often a physical place
– facilitates exchanges between buyers and sellers
-typically involves monetary transactions
-might not have well-defined geographical limits
6. Households
own and sell resources
7. The labor market is an example of a
resource market
8. A rational decision maker will take only those actions for which the expected marginal benefit
is greater than or equal to the expected marginal cost
9. Microeconomics is the study of
the economic behavior of individual decision makers
10. Normative economic statements refer to what should be.
11. “There should be less discrimination against women” is an example of a positive statement.
12. An example of a positive economic statement is, “An increase in the price of a product causes consumers to purchase more of that product.”
13. Which of the following is an example of a positive statement?
An increase in the price of gasoline will cause a reduction in the amount purchased.
14. A normative economic statement
is a statement of what ought to be, not what is
15. The difference between positive economic statements and normative economic statements is that
positive statements are based on fact while normative statements are based on opinion
16. One might commit the fallacy of composition by concluding that
what is good for the individual is necessarily good for the group
17. In a circular-flow model, households supply all of the following except
goods and services
18. Rational self-interest is equivalent to pure selfishness
19. Which of the following would be a topic considered in the field of macroeconomics?
Studying the amazing recent growth of the Chinese economy.
25. The numerical value of the slope of a line depends in part on the units of measurement used.
26. If slope = -2 for a line on a graph with x on the horizontal axis and y on the vertical axis, then if
x increases by 4, y decreases by 8
27. A U-shaped curve has a positive slope everywhere.
28. Moderate exercise is better than none, but excessive exercise is harmful. What is the shape of the graph of health benefits versus hours of exercise per week if health benefits are measured on the vertical axis and exercise is measured on the horizontal axis?
a hill-shaped curve

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