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A typical production possibilities curve:

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does not specify how much of each product society should produce.

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Macroeconomics can best be described as the

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study of the large aggregates of the economy or the economy as a whole

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purposeful behavior

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Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase.

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Which of the following is a microeconomic statement?

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The price of personal computers declined 4.7 percent last year.

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a principle

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A well-tested economic theory is often called

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The economic perspective entails

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a comparison of marginal benefits and marginal costs in decision making

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A typical concave (bowed out from the origin) production possibilities curve implies

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that society must choose among various attainable combinations of goods

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In moving along a given budget line

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he prices of both products and money income are assumed to be constant.

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Even though local newspapers are very inexpensive, people rarely buy more than one of them each day.

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implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost

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Which of the following statements pertains to macroeconomics

answer

National income grew by 2.7 percent last year.

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this is a correct statement

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Although they are generalizations, economic laws are useful because they allow us to predict and therefore influence or adjust to events.

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Brinley's statement is normative; Katie's statement is positive

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Brinley says that "gas prices are rising because there aren't enough oil refineries." Katie argues that "gas prices are rising because of the growing demand for gasoline from China and India."

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The marginal benefit curve is

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downsloping because successive units of a specific product yield less and less extra benefit.

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An increase in money income:

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shifts the consumer's budget line to the right.

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Assume an economy is incurring unemployment. The effect of resolving this problem will be to

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move the level of actual output on to the economy's production possibilities curve

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The output of MP3 players should be

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reduced if marginal costs exceed marginal benefits.

question

Which of the following lists includes only capital resources

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Autos owned by a car rental firm; computers at the car rental agency; the vans that shuttle rental customers to and from the airport.

question

international specialization and trade

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Which of the following will enable a nation to obtain a combination of consumer goods and capital goods outside its production possibilities curve?

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If the output of product X is such that marginal benefit equals marginal cost:

answer

the correct amount of resources is being allocated to X's production.

question

For economists, the word "utility" means:

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pleasure or satisfaction

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You should decide to go to a movie

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if the marginal benefit of the movie exceeds its marginal cost

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f an economy is operating inside its production possibilities curve for consumer goods and capital goods, it

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an produce more of both consumer goods and capital goods by using resources that are currently idle

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he fact that the slope of the production possibilities curve becomes steeper as we move down along the curve indicates that

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the principle of increasing opportunity costs is relevant

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positive and correct

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"Economics is concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity."

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Microeconomics focuses on specific decision-making units of the economy; macroeconomics examines the economy as a whole.

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is a true statement

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Through specialization and international trade, a nation:

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can attain some combination of goods lying outside its production possibilities curve.

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loaded terminology

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(Last Word) A caller to a radio talk show states that oil companies are "greedy price gougers."

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Microeconomics

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is concerned with individual economic units and specific markets

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A nation's production possibilities curve might shift to the left (inward) as a result of

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the depletion of its soil fertility due to overplanting and overgrazing

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what is true for the individual must necessarily be true for the group

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(Last Word) The fallacy of composition states that:

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Ben says that "an increase in the tax on beer will raise its price." Holly argues that "taxes should be increased on beer because college students drink too much."

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Holly's statement is normative, but Ben's is positive

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Which of the following statements, if any, is correct for a nation that is producing only consumer and capital goods?

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Other things equal, the more capital goods a nation produces, the greater will be its future growth rate.

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Suppose that Julia receives a $20 gift card for the local coffee shop, where she only buys lattes and muffins. If the price of a latte is $4 and the price of a muffin is $2, then we can conclude that Julia:

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can buy 5 lattes or 10 muffins if she chooses to buy only one of the two goods

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achieving points beyond the production possibilities curve through international specialization and trade

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Suppose that Scoobania, which has full employment, can obtain 1 unit of capital goods by sacrificing 2 units of consumer goods domestically but can obtain 1 unit of capital goods from another country by trading 1 unit of consumer goods for it.

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fallacy of composition

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(Last Word) The safest way for an individual to leave a burning theater is to run for the nearest exit; it is therefore also the best means of escape for a large audience.

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Kelly works at an ice cream shop and observes that the number of people buying ice cream varies greatly from day to day. For a couple of weeks she has recorded the number of people at the shop each day, as well as the daily temperature. If Kelly is using the scientific method to better understand ice cream buying habits, her next step is to

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used the observed data to form a hypothesis obtuse cream buying behavior

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A person should consume more of something when its marginal

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benefit exceeds its marginal cost

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A nation's production possibilities curve is bowed out from the origin because

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esources are not generally equally efficient in producing every good

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Economics may best be defined as the:

answer

social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity

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Any combination of goods lying outside of the budget line.

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is unattainable, given the consumer's income.

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The economizing problem is one of deciding how to make the best use of:

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limited resources to satisfy virtually unlimited wants

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The budget line shows:

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all possible combinations of two goods that can be purchased, given money income and the prices of the goods.

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According to economists, economic self-interest

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is a reality that underlies economic behavior.

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opportunity costs

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Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students.

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An economic hypothesis

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is a possible explanation of cause and effect.

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(Consider This) In response to the terrorist attacks of September 11, 2001, the government decided to allocate more resources toward defense goods. The government's decision reflects their assessment that

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the marginal benefits of additional defense goods outweighed the marginal cost

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Microeconomics is concerned with

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a detailed examination of specific economic units that make up the economic system

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If all discrimination in the United States were eliminated, the economy would

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produce at some point closer to its production possibilities curve.

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The assertion that "there is no free lunch" means that:

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all production involves the use of scarce resources and thus the sacrifice of alternative goods

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If the production possibilities curve is a straight line

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economic resources are perfectly substitutable between the production of the two products

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Purposeful behavior means that

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people weigh costs and benefits to make decisions.

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Assume that a change in government policy results in greater production of both consumer goods and investment goods

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the economy was not employing all of its resources before the policy change

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When economists say that people act rationally in their self-interest, they mean that individuals:

answer

ook for and pursue opportunities to increase their utility.

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(Last Word) The fallacy of composition is essentially the error of

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generalizing from the particular to the general.

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The optimal allocation of resources is found:

answer

where MB = MC.

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Advancements in technology that make labor more productive

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In recent years the economy of Japan has grown, despite the fact that the population of Japan has declined. Which of the following would best explain Japan's economic growth despite having a smaller population?

question

The production possibilities curve

answer

is a frontier between all combinations of two goods that can be produced and those combinations that cannot be produced.

question

hypothesis

answer

Which of the following terms implies the least degree of confidence in an economic generalization?

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Any point inside the production possibilities curve indicates

answer

that more output could be produced with the available resources

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(Last Word) If variables X and Y are positively correlated, this means that

answer

causation may or may not exist between X and Y

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Economic theories:

answer

are generalizations based on a careful observation of facts

question

A country can achieve some combination of goods outside its production possibilities curve by

answer

specializing and engaging in international trade

question

According to economists, economic self-interest:

answer

is a reality that underlies economic behavior.

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The term "other things equal" means that:

answer

a number of relevant variables are assumed to be constant.

question

Economic resources are also called

answer

factors of production

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