Chapter One Test – Flashcards

Unlock all answers in this set

Unlock answers
question
scarcity
answer
Economics deals primarily with the concept of
question
resources are limited
answer
The phenomenon of scarcity stems from the fact that
question
how society manages its scarce resources
answer
Economics is the study of
question
the combined actions of millions of households and firms
answer
In most societies, resources are allocated by
question
people face tradeoffs
answer
The adage, "There is no such thing as free lunch," means
question
durable and nondurable goods
answer
Guns and butter are used to represent the classical societal tradeoff between spending on
question
each member of society has the same income
answer
Economists use the word equality to describe the situation in which
question
efficiency
answer
The property of society getting the most it can from its scarce resources is called
question
a reduction in efficiency
answer
When the government attempts to improve equality in an economy the result is often
question
what you give up to get that item
answer
The opportunity cost of an item is
question
the price you pay for the ticket and the value of your time
answer
When computing the opportunity cost of attending a basketball game you should include
question
takes an action only if the marginal benefit of that action exceeds the marginal cost of the action
answer
A rational decision maker
question
small, incremental adjustment
answer
A marginal change is a
question
rent the room because the marginal benefit exceeds the marginal cost
answer
Suppose the cost of operating a 100 room hotel for a night is $10,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $30 and a customer is willing to pay $60 for the night, the hotel manager should
question
People face tradeoffs
answer
A tax on gasoline encourages people to drive smaller, more fuel-efficient cars. Which principle of economics does this illustrate?
question
benefits both the United States and Guatemala
answer
Trade between the United States and Guatemala
question
because it allows specialization, which increases total output
answer
Senator Bright, who understands economic principles, is trying to convince workers in her district that trade with other countries is beneficial. Senator Bright should argue that trade can be beneficial
question
are more efficient
answer
One advantage market economies have over centrally-planned economies is that market economies
question
self-interest and prices
answer
In a market economy, economic activity is guided by
question
influencing the actions of buyers and sellers
answer
Prices direct economic activity in a market economy by
question
may be able to improve economic efficiency or equality
answer
Public policies
question
market failure
answer
The term used to describe a situation in which markets do not allocate resources efficiently is
question
externalities and market power
answer
Causes of market failure include
question
refers to the quantity of goods and services produced from each unit of labor input
answer
The term "productivity"
question
productivity
answer
What is the most important factor that explains differences in living standards across countries?
Get an explanation on any task
Get unstuck with the help of our AI assistant in seconds
New