Economics Chapter 1-4 Review – Flashcards
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as long as the marginal benefit it receives is just equal to or grater than $200
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if the marginal cost of producing a television is constant at $200, then a firm should produce this item
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household and firms
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in a market economy, ________________ interact in markets to decide the answers to the fundamental economic questions.
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They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time
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which of the following best describes an assumption economists make about human behavior?
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productive efficiency
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competition among sellers generates
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it is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact,it is a change in variable Y that cause a change in variable X
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what is the "reverse causality" problem in determining cause and effect?
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minimum wage laws benefit some workers and harm others
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the Economic analysis of minimum wage involved both normative and positive analysis. consider the following consequences of a minimum wage:
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What to produce?
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Fast food restaurants produce a range of menu items such as hamburgers, chicken sandwiches, salads and french fries. which fundamental economic question are the addressing by offering this range of items?
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it is a simplified version of some aspect of economic life used to analyze an economic issue
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What is an economic model?
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all resources are fully utilized
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if society decides it wants more of one good and __________, then it has to give up some of another good and incur some opportunity costs.
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the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts
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Increasing marginal opportunity cost implies that?
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increase in demand; increase in quantity demanded
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an ________ is represented by a rightward shift of the demand curve while an ___________ is represented by a movement along a given demand curve.
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substitution; income
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when the price of a good rises, consumers buy a smaller quantity because of the ________ effect and the _______ effect.
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Macroeconomics
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the branch of economics which studies the behavior of entire economies and policies that affected the economy as a whole is called?
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the bank must have weighed the costs of installing bandit barriers against the benefits and decided that they have "no interest in ever putting in the barriers.
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It would seem that Commerce bank would have a strong incentive to install "bandit barriers" to deter robberies. why wouldn't they do it?
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whether it is cheaper to produce with more machines or more workers
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which of the following is an example of economic trade-off that a firm has to make?
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Oranges and peaches are substitutes
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Suppose that when the prices of oranges decrease, the Sarita decreases her purchase of peaches. to Sarita,
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the price of hybrid automobiles will fall in response to the surplus; as the price falls the quantity demand will increase and the quantity supplied will decrease
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Assume there is a surplus in the market for hybrid automobiles. which of the following statements correctly describes this situation?
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people respond to economic incentives
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Suppose the U.S. government encouraged new teachers to take jobs in under preforming schools by paying the new teachers $20,000 bonus. these teachers would be exemplifying the economic idea that
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above; shortage
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In cities with rent control, people have an incentives to list their apartments on suite such as Aribnb at rents____________ the controlled rates, because the rent control causes a _______ of apartments
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is equal to marginal benefit
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The additional benefit to a consumer from consuming one more unit of a good or service.
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the reduction in economic surplus resulting from not being in a competitive equilibrium
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deadweight loss refers to
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the economic surplus
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the sum of consumer surplus and producer surplus is equal to
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how households and firms make choices
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microeconomics is the study of
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allocative efficiency
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when production reflects consumer preferences, __________ occurs
