Econ 202 Chapter 2 – Flashcards
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-Subtraction. - Multiplication. - Division
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Which of the following can be derived from other assumptions about numbers.
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Numbers to cardinal numbers to addition to subtraction to multiplication to division.
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The video describes the steps in simple arithmetic as proceeding from
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Scarcity
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Which of the following are assumptions of economics
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- Tradeoffs. - Opportunity costs.
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Which of the following can be derived from other assumptions of economics
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- Why markets are efficient. - When markets are efficient. - When government intervention helps or hurts economic performance
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Using basic assumptions you can determine
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determining the additional benefits and the additional costs of that activity.
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Making "how much" decisions involves
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weighing the costs and benefits of a decision before deciding if it should be pursued.
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In economics, the term ________ means "additional" or "extra."
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marginal cost
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The extra cost associated with undertaking an activity is called
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people respond to economic incentives.
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Suppose the U.S. government encouraged consumers to trade in their old automobiles for more efficient, new models by paying up to $5,000 for the old automobiles. These consumers who did trade in their old automobiles to take advantage of the government offer would be exemplifying the economic idea that
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Making optimal decisions "at the margin" requires
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Making optimal decisions "at the margin" requires
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equal to the highest value of an alternative use of the time and money spent on the festival.
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The opportunity cost of going to an outdoor music festival is
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the economic cost of using a factor of production is the alternative use of that factor that is given up.
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The principle of opportunity cost is that
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true
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When voluntary exchange takes place, both parties gain from the exchange.
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Marginal cost
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The extra cost associated with undertaking an activity is called
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Opportunity cost
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The best alternative use of a resource is referred to as its:
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are rational and respond to incentives.
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Economists assume that individuals
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generates enjoyment or satisfaction.
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An item has utility for a consumer if it
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people with health insurance are more likely to be overweight than people without health insurance.
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Holding all other personal characteristics-such as age, gender, and income-constant, economists would expect that
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rationally
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Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________, meaning they make the best decisions given their knowledge of the costs and benefits.
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extra satisfaction received from consuming one more unit of a product.
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Marginal utility is the
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the choices people make to attain their goals, given their scarce resources.
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By definition, economics is the study of
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make themselves as well off as possible.
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Economists assume that the goal of consumers is to
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undertake activities that benefit others and hurt themselves.
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Economists assume that rational people do all of the following except
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people are rational.
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Suppose that some investors have decided that economic and financial uncertainty have made the prospect of investing in domestic stock markets more risky than investing in foreign stock markets, and therefore choose to invest in foreign markets. By using all available information as they act to achieve their goals, these investors are exemplifying the economic idea that
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even though people may not behave rationally all the time.
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Economists assume that rational behavior is useful in explaining choices people make
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Scarcity necessitates that people make trade-offs.
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Which of the following is a positive economic statement?
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the price of wheat is too low.
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Which of the following is a normative economic statement?
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Farmers should not be allowed to grow and sell genetically-modified crops
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Which of the following is a normative economic statement?
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If the price of iPhones falls, a larger quantity of iPhones will be purchased.
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Which of the following is a positive economic statement?
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Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable.
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Which of the following is a normative economic statement?
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true
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"An increase in the price of gasoline will increase the demand for hybrid vehicles." This statement is an example of a positive economic statement.
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Raising the tax on gasoline raises the selling price of gasoline.
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Which of the following is a positive economic statement?
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false
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Positive analysis is concerned with "what ought to be," while normative analysis is concerned with "what is."
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The price of gasoline is too high.
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Which of the following is a normative economic statement?
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If the price of beef falls, a larger quantity of it will be bought.
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Which of the following is a positive economic statement?
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Testing with data enables economists to distinguish between good models and bad models.
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Which of the following statements is true?
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has been left out, and if included, would explain why the variables considered in a study are correlated.
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An omitted variable is a variable that:
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there is a mutual relationship between both the variables.
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A correlation between two variables implies that:
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a simplified description, or representation, of reality.
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A model refers to:
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Reverse causality
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________ occurs when the direction of cause and effect is mixed up in a study.
