Chapter 1 Homework Test Answers – Flashcards

The definition of economics states that it is the study of how​ _________. A.agents choose to allocate scarce resources and the impact of those choices on society. B. money influences the economy in the short run and the long run. C.the government determines​ policies, businesses set​ prices, and consumers choose how much to buy. D.businesses make decisions and how those decisions impact other​ firms, the​ government, and consumers.

The statement that the U.S is too agressive in increasing the money supply is a ______ statement since it describes what people ________.

The statement that the U.S saw the unemployment rate peak at 10% in 2009 is a ______ statement since it describes what people actually do.

The ethical implications of a hotly debated government policy would best be considered a​ _________. A.positive​ question, since it deals with a subjective issue based on personal preferences. B.normative​ question, since it deals with a subjective issue based on personal preferences. C. positive​ question, since it deals with an objective issue based on factual evidence. D.normative​ question, since it deals with an objective issue based on factual evidence

Economics is divided into two broad fields of​ study: microeconomics and macroeconomics. Microeconomics studies​ _________, while macroeconomics studies​ _________. A.economy-wide phenomena; decisions made by the government. B.a small piece of the overall​ economy; the economy as a whole. C.money; policy. D issues relating to​ businesses; choices made by individuals and consumers.

Policy decisions made by the government are analyzed by​ _________. A.either microeconomics nor macroeconomics. B.only microeconomics. C.only macroeconomics. D.both microeconomics and macroeconomics.

A policy such as those limiting a firm's monopoly powers would be studied under ________ since it deals with __________

The three principles of economics includes optimization, equilibrium, and empiricism Equilibrium describes a situation where _________ Empiricism describes a situation where _____ Optimization describes a situation where _______

​Economics, anthropology,​ psychology, sociology, and political science all study human behavior. Economics differs from these other social sciences because it also addresses these three key​ concepts: _________. A.Empiricism, ideology, and social responsibility. B.Equilibrium, government​ actions, and incentives. C.Culture, optimization, and trade. D.Optimization, equilibrium, and empiricism.

Suppose your New Year resolution is to get back in shape. You are considering various ways of doing​ this: you can sign up for a gym​ membership, walk to​ work, take the stairs instead of the​ elevator, or watch your diet. How would you evaluate these options and choose an optimal​ one? A.It makes the most sense to do the action that costs the least amount of money. B.You should choose an activity randomly to avoid regretting your decision later. C.You should do the activity that gives you the greatest personal​ benefit, regardless of the cost. D.Do a​ cost-benefit analysis to compare the alternatives.

When making your decision about which activity to​ choose, you should consider the monetary cost _______ the opportunity cost of the activities. The goal is to choose the option that offers the greatest _______ benefit.

During the process of optimization economists believe that people are considering​ _________. A.what they would do if they had no money or time constraints of any kind. B.the benefits of their choices for others more than the benefits to themselves. C.only the decisions that will result in the least cost to the individual. D.the feasibility of a​ choice, given the information available at the time.

The goal of optimization for an individual is to maximize ________. .

Suppose that you allocate​ $20 each week for your entertainment budget. This money is spent on two​ items: either renting movies for​ $1 each at Redbox or downloading songs from iTunes at​ $1 each. Given this​ information, which of the following would represent your budget constraint for​ entertainment? A.Amount spent on iTunes minus− Amount spent at Redbox​ = $20. B.Amount spent on iTunes minus− Amount spent at Redbox minus− ​$1 =​ $20. C.Amount spent on iTunes​ + Amount spent at Redbox​ = $1. D.Amount spent on iTunes​ + Amount spent at Redbox​ = $20.

Your budget constraint for entertainment illustrates the concept of __________ ​, since as you increase your purchases of one​ item, you must __________.

The opportunity cost of an activity is a measure of ________ when you do that activity.

​Let's say that you are trying to decide what to do on Friday at 11 a.m. You rank your possible options from the one you value the most to the one that you value the least in the following​ order: going to​ class, sleeping in​ late, going to work​ early, getting​ lunch, going to the gym to​ exercise, and watching television. If you decide to go to​ class, then what do we know about the opportunity cost of your​ decision? A.The opportunity cost would be​ working, since it is the only option that can be put in a dollar amount. B.The opportunity cost would include sleeping in​ late, going to work​ early, getting​ lunch, going to the gym to​ exercise, and watching television. C.The opportunity cost would be sleeping in​ late, since it was your​ next-best option. D.There would be no opportunity cost in this example.

Comparing a set of feasible alternatives and picking the best one is an optimization process called​ _________. A.statistical inference. B.likelihood estimation. C.normative analysis. D.cost-benefit analysis.

When deciding whether to install visible countdown timers for pedestrians at​ crosswalks, which of the following would be considered in the​ cost-benefit analysis? ​(Check all that apply.​) A.The value of the​ pedestrians' lives saved by having the timers to assist in crossing the street. B. The cost in terms of dollars of installing these new timers all over the city. C.he higher maintenance bill associated with fixing these more complex signals when they break down. D.he value of the lives lost by drivers who watch the countdown timers and try to make it through a light.

Free riding occurs when ___________ are out of sync with the_______

Which of the following is subject to the​ free-rider problem? A.Public libraries. B.National security. C.A neighborhood watch. D.All of the above.

Which of the following is more susceptible to the free-rider problem: state parks or street lights? A. Use of street lights is more susceptible since even those who don't pay taxes still benefit, while state parks can charge for admission, so that everyone who goes pays their share B. State parks, since admission cannot be denied to anyone so everyone benefits, while street lights only benefit a small number of people at any given time C.Both are equally susceptible to the free-rider problem D. Neither are susceptible to the free-rider problem

For a market to be in​ equilibrium, three conditions must hold. Fill in the blanks below to complete these conditions. The amount produced by sellers must be ___the amount purchased by buyers. The costs of making a product must be _________the final price at which the product sells. Buyers must place a value on the uses of the product that is ___________the cost of buying the product.

Which of the following is true regarding the concept of​ causation? A.It states that if event A causes event​ B, then event B cannot have a causal effect on event A. B.It states that if event A causes event​ B, then event B must also cause event A. C.It describes how one event can bring about change in another. D.For any two events that​ occur, economists state that the first must have caused the​ second, since it came first.

Which of the following is not an example of causation? A.Playing contact sports will lead to knee injuries B. Driving without car insurance will lead to getting into an accident C. Talking on the phone while driving will lead to car accidents D. All of the above are examples of causation

Identify the cause and effect in the following​ examples: Lower infant mortality is ____________ and an improvement in nutrition is ____________ .A surge in cocoa prices is ________ and a pest attack on the cocoa crop is ___________ .

In which of the following areas will taking an economics course help benefit you throughout your​ life? A.It will instill the concept that what activity is given up by a decision plays an important role when making choices. B.It will help you analyze and predict human behavior in a variety of situations. C.It will give you the logic behind using​ cost-benefit analysis when evaluating decisions. D.All of the above.