question

Limited resources and infinite wants.

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Scarcity in an economy emerges from

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-We must find ways to deal with that scarcity. -We must make choices and give up things we really want. -Figure out the best set of social systems to address scarcity.

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Scarcity means that

question

Rap music

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In which of the ways did the video not indicate that Americans were rich compared to other societies today

question

Power

answer

In which of the following ways did the video not indicate you were rich compared to King George?

question

People always want more

answer

People do not "feel" rich because

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-Scarcity. -The social institutions used to address -scarcity. -How much to produce, how to produce it, and who gets it.

answer

Economics studies...

question

What is the best type of cell phone?

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The following is not an example of the economic question of what to produce?

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-People should work on teams to produce things because there is more job satisfaction. -Products should be made more reliably. -The government should not be the entity to choose the amounts of goods and services provided.

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The following can be established using economic analysis:

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-Customs -Apprenticeships -Markets -Central Control

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The following methods have been used to govern economic activity:

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-Family or clan leaders. -Warlords. -Dictators. -Tribal chieftains.

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The following is NOT an example of central economic control

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-It permits specialization. -It permits people some people to produce more than they consume. -It takes advantage of comparative advantage.

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Advantages of Trade

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has been a feature of nearly all economies

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Trade...

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Regulated resources like land and water

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Central control of economies

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-Markets use money -Markets are more efficient -Barter limits trades because each person must want what the other has

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Key advantages of market exchange compared to barter trade...

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The role of markets in determining economic efficiency

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Adam Smith's book, the Wealth of Nations, investigated...

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Determining what will be produced, how it will be produced, and who gets it and then evaluating these outcomes

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The steps needed to evaluate the best way to organize an economy include...

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What would happen if you organized more of the economy with markets?

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A major question that faces societies 250 years ago was...

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Competitive markets ensure efficient amounts of each good, produce that good at least cost, and allocate the good among consumers in the best way possible.

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Adam Smith's Invisible Hand Theorem indicates that competitive markets are efficient because:

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Following their own self-interest, doing whatever serves them best.

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When buyers and sellers operate in a competitive market, they are...

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Are efficient if they are investing their own money.

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When people invest in a business, those investments...

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They prefer the good to the other good.

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When buyers buy goods in a market they are doing so because

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Numbers to cardinal numbers to addition to subtraction to multiplication to division.

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The steps in simple arithmetic as proceeding from

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-tradeoffs -opportunity costs

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The following can be derived from other assumptions of economics

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Scarcity

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The following is an assumption 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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-Numbers exist -Addition

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The following are assumptions needed for simple arithmetic

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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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True

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The additional cost to a producer of hiring an additional unit of labor is called the marginal cost.

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Marginal

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This term means "additional" or "extra"

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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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Opportunity cost

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The highest valued alternative that must be given up to engage in an activity is the definition of

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Marginal Cost

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The extra cost associated with undertaking an activity is called

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True

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When voluntary exchange takes place, both parties gain from the exchange

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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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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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extra satisfaction received from consuming one more unit of a product.

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Marginal utility is the

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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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are rational and respond to incentives.

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Economists assume that individuals

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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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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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generates enjoyment or satisfaction.

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An item has utility for a consumer if it

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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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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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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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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 gasoline is too high

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Which of the following is a normative 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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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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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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change in one variable is the reason for the change in another variable.

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Causation occurs when:

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Reverse causality

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________ occurs when the direction of cause and effect is mixed up in a study.

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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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portray reality in all its minute details.

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Economic models do all of the following except

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