Econ Study Guide Chapter 1 – Flashcards
49 test answers
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Help us understand economic phenomena in the real world
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Economists develop models to
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incentive
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Father says, "Earn a B-average on your next report card and I'll help you buy a car." An economist would say that this parent is providing his child an
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How people allocate their limited resources to satisfy their unlimited wants
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Economists is the study of
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Command and control
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What is the type of economic system that relies on one central authority to make economic decisions?
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Individuals who own the resources
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Under the pure price system, the decision of resource allocation is made by
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How individuals allocate scare resources to satisfy unlimited human wants
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Economics deals with
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Involves value judgements
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Normative economics
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Resources;wants
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In economics, _ are limited but _ are unlimited
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Are statements of "what ought to be"
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Normative economic statements
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It would be far too complicated to analyze
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One problem with constructing a perfectly complete realistic economic model is that
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Every economic model is based on a set of assumptions
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Which of the following statements about economic models is true?
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Social sciences
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Economics is a part of the
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Prices
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In the market system, _ provide signals about whether resources are relatively scarce or abundant
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Analyze how choices are made
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A fundamental aspect of economics is to
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In all decision making
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Economic analysis is used
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is objective
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Positive economics
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Do not intentionally make decisions that make themselves worse off
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Economists assume people behave rationally, which means that people
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If the price of eggs increases, the quantity demanded of bacon will fall
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Which of the following is a positive economic statement?
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Your looking out for what is best for you as an individual
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When the text refers to rational-self interest, it means
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A positive statement
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The headline in the local paper today is, "College tuition next fall will be raised by 3 percent." This statement is an example of
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Incentives
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The potential rewards that are available to an individual if a particular activity is undertaken are known as
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The government should increase spending during times of economic recession
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Which of the following is a normative economic statement?
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Resources
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In economics, items that are used to produce goods and services are known as
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A model helps us to understand, explain, and predict economic phenomena in the real world
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One reason why economists often use models in their analysis is that
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Economics is the study of how people make choices to satisfy their wants
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Which statement most accurately defines economics?
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Scarce resources and unlimited wants
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Economics is the study of
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1)What to produce 2)How to produce items 3)For whom items are produced All of these items are correct
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The issues that an economic system attempts to solve include
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How to eliminate choices?
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Which of the following is NOT one of the basic questions that an economic system attempts to answer?
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1) Make decisions in financing your home 2) Decide whether the U.S. Government should encourage or discourage immigration 3) Make better decisions concerning your education All of these are correct
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The economic way of thinking will help you
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Items of value that are used to make other things that satisfy people's wants
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Economic resources are
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Men and women should earn the same salary if they perform the same job
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Which of the following is a normative economic statement?
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wants
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In economics, all the items that people would consume if they had unlimited income are known as
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Economic models are based on pure fact and no assumptions
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Which of the following statements concerning economic models is FALSE?
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that involve the wants of individuals
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Economics is concerned with choices
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Limited and their wants are unlimited
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In economic analysis, people's resources are
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No economic model captures every detail that affects a problem
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Which of the following statements is true?
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Provide a value-free analysis
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Economics seeks to use only positive analysis to
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is a simplified representation of reality
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A map is an example of a model because a map
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The rationality assumption
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The assumption that people do not intentionally make decisions that would leave them worse off is known as
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Command and control
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Central planning is a key characteristic of which economic system?
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buyers and sellers together
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In a market system, the what, how and for whom questions in economics are determined by
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Study of how people make choices to satisfy their wants
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Economics is best defined as the
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Choose among alternatives to satisfy their unlimited wants
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Economics is a social science that involves the study of how individuals
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The amount of financial assistance given to farmers is higher this year than it was years ago
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Which one of the following is an example of a positive statement?
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Market System
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What is the type of mechanism that answers the basic economic questions through a decentralized decision making process?
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