question

true

answer

True or False: A marginal change is a small incremental adjustment to an existing plan of action.

question

true

answer

True or False: Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

question

true

answer

True or False: Choosing not to attend a concert so that you can study for your exam is an example of a tradeoff.

question

what you give up to get it.

answer

In economics, the cost of something is

question

true

answer

True or False: Trade with any nation can be mutually beneficial.

question

a situation in which the market on its own fails to allocate resources efficiently.

answer

The term market failure refers to

question

property rights.

answer

For markets to work well, there must be

question

compare the marginal costs and marginal benefits of each decision.

answer

Making rational decisions "at the margin" means that people

question

enhance individuals' market power.

answer

To promote good economic outcomes, policymakers should strive to enact policies that

question

Productivity in the US is higher than productivity in Ghana. Average income in the US is higher than the average income in Ghana. The US has a higher standard of living than Ghana. All of the above are correct.

answer

US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens of Ghana. Which of the following conclusions can be drawn from this statement?

question

false

answer

True or False: Equality means distributing society's resources in the most efficient manner.

question

true

answer

True or False: Productivity is defined as the quantity of goods and services produced from each unit of labor input.

question

false

answer

True or False: Economics is the study of how evenly goods and services are distributed within society.

question

true

answer

True or False: Scarcity means that there is less of a good or resource available than people wish to have.

question

increase both competition and specialization.

answer

Trade between countries tends to

question

people face tradeoffs.

answer

The adage, "There is no such thing as a free lunch," is used to illustrate the principle that

question

ensure that workers are well educated and have the necessary tools and technology.

answer

To increase living standards, public policy should

question

efficiency and equality.

answer

A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. In other words, the society faces a tradeoff between

question

false

answer

True or False: Efficiency means everyone in the economy should receive an equal share of the goods and services produced.

question

true

answer

True or False: To say people respond to incentives means that people may alter their decisions when the costs and benefits of an action change.

question

true

answer

True or False: Economists study how people make decisions

question

both

answer

Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level. Which country can benefit?

question

laws that reduce pollution raise costs of production and reduce incomes.

answer

A tradeoff exists between a clean environment and a higher level of income in that

question

false

answer

True or False: A rational decisionmaker takes an action if and only if the marginal cost exceeds the marginal benefit.

question

productivity and its standard of living.

answer

A direct or positive relationship exists between a country's

question

lower and raises the variety of goods and services available

answer

Trade makes costs

question

allows specialization, which reduces costs.

answer

Trade

question

true

answer

True or False: Market failure refers to a situation in which the market does not allocate resources efficiently.

question

true

answer

True or False: Using income tax revenue to fund the welfare system illustrates the conflict between efficiency and equality

question

each member of society has the same income

answer

Economists use the word equality to describe a situation in which

question

scarcity.

answer

Economics deals primarily with the concept of

question

...

answer

Chapter 2

question

true

answer

True or False: Economists devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.

question

true

answer

True or False: Economic growth causes a production possibilities frontier to shift outward.

question

true

answer

True or False: Economists usually have to make do with whatever data the world happens to give them.

question

true

answer

True or false: The trade-off between the production of one good and the production of another good can change over time because of technological advances.

question

involve value judgments.

answer

Normative conclusions

question

own the factors of production.

answer

In the simple circular-flow diagram, households

question

In trying to explain the world, economists are scientists; in trying to improve the world, they are policy advisers.

answer

Which of the following statements is correct about the roles of economists?

question

can be useful, even if they are not particularly realistic

answer

Economic models

question

Reducing tax rates on the wealthy would benefit the nation.

answer

Which of the following is an example of a normative, as opposed to positive, statement?

question

economists have not yet convinced the general public that the policies are undesirable.

answer

Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their opposition to such policies, probably because

question

true

answer

True or False: Points inside the production possibilities frontier represent feasible levels of production.

question

true

answer

True or False: If a major union goes on strike, then the country would be operating inside its production possibilities frontier.

question

true

answer

True or False: A circular-flow diagram is a visual model of the economy.

question

true

answer

True or False: Historical episodes allow economists to illustrate and evaluate current economic theories.

question

there is no way to produce more of one good without producing less of the other.

answer

When an economy is operating at a point on its production possibilities frontier, then

question

Economists devise theories, collect data, and analyze the data to test the theories.

answer

With respect to how economists study the economy, which of the following statements is most accurate?

question

resources are specialized; that is, some are better at producing particular goods rather than other goods.

answer

Production possibilities frontiers are usually bowed outward. This is because

question

One economist believes increases in the minimum wage increase unemployment; another economist believes increases in the minimum wage do not increase unemployment.

answer

Sometimes economists disagree because their scientific judgments differ. Which of the following instances best reflects this source of disagreement?

question

economy-wide phenomena.

answer

Macroeconomics is the study of

question

true

answer

True or False: Microeconomics and macroeconomics are closely intertwined.

question

sets the nation's monetary policy.

answer

The Federal Reserve

question

Universal health care would be good for U.S. citizens.

answer

Which of the following is another example of a normative, as opposed to positive, statement?

question

is a positive statement.

answer

A statement describing how the world is

question

true

answer

True or False: Points inside the production possibilities frontier represent inefficient levels of production.

question

the dispassionate development and testing of theories about how the world works.

answer

The scientific method is

question

how individual households and firms make decisions.

answer

Microeconomics is the study of

question

true

answer

True or False: A production point is said to be efficient if there is no way for the economy to produce more of one good without producing less of another

question

people face trade-offs

answer

The production possibilities frontier provides an illustration of the principle that

question

economists have different values and scientific judgment.

answer

Economists sometimes give conflicting advice because

question

...

answer

Chapter 3

question

true

answer

True or False: Trade allows all countries to achieve greater prosperity

question

false

answer

True or False: Goods produced abroad and sold domestically are called exports and goods produced domestically and sold abroad are called imports.

question

false

answer

True or False: Production possibilities frontiers cannot be used to illustrate tradeoffs.

question

true

answer

True or False: Differences in opportunity cost allow for gains from trade.

question

what it will cost him more to make than to buy.

answer

Adam Smith asserted that a person should never attempt to make at home

question

Shawn has a comparative advantage in the production of donuts.

answer

If Shawn can produce donuts at a lower opportunity cost than Sue, then

question

allows people to specialize according to comparative advantage.

answer

Trade can make everybody better off because it

question

free international trade.

answer

Economists generally support

question

when the economy is self-sufficient.

answer

An economy's production possibilities frontier is also its consumption possibilities frontier

question

they choose not to trade with one another.

answer

Suppose there are only two people in the world. Each person's production possibilities frontier also represents his or her consumption possibilities when

question

true

answer

True or False: The production possibilities frontier shows the trade-offs that the producer faces but does not identify the choice the producer will make

question

false

answer

True or False: If a country has a lower opportunity cost than its potential trading partner, the country should decide to be self-sufficient.

question

true

answer

True or False: An economy can produce at any point on or inside its production possibilities frontier, but it cannot produce at points outside its production possibilities frontier.

question

true

answer

True or False: If a person chooses self-sufficiency, then she can only consume what she produces.

question

comparative advantage

answer

When describing the opportunity cost of two producers, economists use the term

question

rely upon one another for the goods and services we consume.

answer

When an economist points out that you and millions of other people are interdependent, he or she is referring to the fact that we all

question

an absolute advantage in the production of that good.

answer

The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good,

question

consume more goods than we otherwise would be able to consume.

answer

The most obvious benefit of specialization and trade is that they allow us to

question

rises

answer

When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy

question

true

answer

True or False: Trade allows a country to consume outside its production possibilities frontier

question

the two countries wish to take advantage of the principle of comparative advantage.

answer

When two countries trade with one another, it is most likely because

question

the United States should produce more pork than what it requires and export some of it to Mexico.

answer

Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that

question

allows each country to consume at a point outside its production possibilities frontier.

answer

Trade between countries

question

false

answer

True or False: Opportunity cost refers to how many inputs a producer requires to produce a good.

question

true

answer

True or False: Specialization and trade can make everyone better off if a person can obtain goods at prices that are less than that person's opportunity cost.

question

true

answer

True or False: Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage.

question

false

answer

True or False: For international trade to benefit a country, it must benefit all citizens of that country.

question

Iowa has a comparative advantage in the production of corn

answer

If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn, then

question

goods produced abroad and sold domestically.

answer

By definition, imports are

question

the opportunity cost of producing a bushel of wheat is lower for Canada than it is for the U.S.

answer

Canada and the U.S. both produce wheat and computer software. Canada is said to have the comparative advantage in producing wheat if

question

false

answer

True or False: A production possibilities frontier is a graph that shows the combination of outputs that an economy should produce.

question

true

answer

True or False: As long as two people have different opportunity costs, each can gain from trade with the other, since trade allows each person to obtain a good at a price lower than his or her opportunity cost.

question

lower than his or her opportunity cost of that good.

answer

person can benefit from specialization and trade by obtaining a good at a price that is

question

goods produced domestically and sold abroad.

answer

By definition, exports are

question

Americans buy tube socks from China. Residents of Maine drink orange juice from Florida. A homeowner hires the kid next door to mow the lawn. All of the above are examples of the principle that trade can make everyone better off.

answer

Which of the following is not an example of the principle that trade can make everyone better off?

Economics 1-3 – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards