question

involves comparing the additional costs and additional benefits of an activity before deciding

answer

When economic choice involves an adjustment to an existing situation, marginal analysis

question

A good or service is scarce

answer

If the amount people desire exceeds the amount available at a zero price, then

question

True

answer

Most real economic choices involve small (or marginal) changes, rather than all-or-nothing decisions. True or False?

question

individuals decide to use scarce resources in an attempt to satisfy their unlimited wants

answer

Economics is best defined as the study of how

question

water is limited relative to people's unlimited wants

answer

Michigan has an abundant supply of fresh water. However, an economist would consider it a scarce resource because

question

Entrepreneurs

answer

They benefit from what's left over after paying other resource suppliers, They are rewarded by profits, They sometimes suffer losses, They have the talent required to dream up a new product or find a better way to produce an existing one.

question

people implicitly calculate the costs and benefits of an activity to decide if it is worthwhile

answer

The assumption that individuals act rationally implies that

question

Economic theory

answer

predicts the average behavior of a group of similar economic decision makers after an economic change

question

what is good for the individual is necessarily good for the group

answer

One might commit the fallacy of composition by concluding that

question

True.

answer

A good economic theory brings clarity to chaos. True or False?

question

True.

answer

Secondary effects are consequences of economic actions that develop slowly over time as people react to events. True or False?

question

mistake of ignoring secondary effects

answer

Environmentalists continually argue for the use of alternatives to fossil fuels for generating energy. For example, harnessing wind by creating wind farms has been one alternative proposed and implemented. When it is found that these wind farms lead to the slicing and dicing of migratory birds and the decimation of local bat populations, we could say that environmentalists have committed the

question

False.

answer

The association-causation fallacy is the error of assuming that what is true for one member of a group must be true for the group. True or False?

question

Economics

answer

provides the only reasonable explanation of how people make decisions

question

Whether Jacob should drive or walk to the local convenience store

answer

Which of the following decisions lends itself to marginal analysis

question

the overall performance of the economy as a whole

answer

In macroeconomics, we analyze

question

True

answer

Profit is the payment made for land resources. True or False?

question

what is true for the individual is also true for the group

answer

Someone who commits the fallacy of composition is likely to assume that

question

price of the product minus the cost of the resources used to produce the product

answer

If a business produces and sells only one unit of a good, its profit would be the

question

Scarcity

answer

exists because people have wants that are unlimited relative to the availability of resources to satisfy those wants.

question

politicians do not consider its secondary effects

answer

One of the difficulties with an economic policy such as rent control is that

question

False.

answer

As a scientist, an economist's main professional objective is to become wealthy. True or False?

question

Goods and services.

answer

In a circular-flow model, households supply all of the following except

question

product markets

answer

Goods and services are exchanged in

question

a good is tangible; a service is not

answer

The difference between a good and a service is that

question

people must make choices among alternatives

answer

Because resources are scarce,

question

are the primary focus of economics

answer

Choices made by economic decision makers

question

False

answer

A rational individual would make charitable contributions only if such contributions receive favorable tax treatment. True or False?

question

Scarcity

answer

Insufficient resources to satisfy unlimited wants

question

Macroeconomics

answer

The study of the behavior of the economy as a whole

question

Economics

answer

The study of how individuals and nations deal with the problem of scarcity.

question

Capital

answer

machines, buildings, tools, and knowledge

question

makes accurate predictions

answer

An economic model is useful if it

question

Capital

answer

pizza ovens, a college education, carpentry skills, and bulldozers are all examples of what?

question

making decisions aimed at achieving some predetermined goal

answer

Rational choice by an individual implies

question

True

answer

The opportunity cost of going to college consists of more than just the tuition that will be paid. True or False?

question

impossible to determine because the most preferred alternative is not known

answer

Suppose you have an hour before your next class starts. You can either read a book, get something to eat, or take a nap. The opportunity cost of getting something to eat is

question

workers are more productive when they are being paid

answer

Fast food is faster and cheaper than a similar meal you could prepare for yourself. Which of the following does not explain that fact?

question

varies, depending on time and circumstances

answer

Your opportunity cost of choosing a particular activity

question

An economic system

answer

is a set of social institutions and mechanisms organized to answer the three economic questions

question

Opportunity costs are constant

answer

On a straight-line production possibilities frontier, which of the following is true?

question

we can conclude nothing about comparative advantage

answer

If Evan has an absolute advantage in cleaning and bookkeeping when compared to Gloria, then

question

Comparative advantage

answer

the ability of an individual to produce a good at a lower opportunity cost than some other individual can

question

enable the economy to produce outside its original production possibilities frontier

answer

An improvement in technology would

question

larger and larger amounts of good A must be sacrificed

answer

The concave shape of a production possibilities frontier showing possible output levels of good A and good B indicates that if the economy produces more and more of good B,

question

Tetah knitted and Mohammed baked

answer

In one week, Mohammed can knit 5 sweaters or bake 240 cookies. In one week, Tetah can knit 15 sweaters or bake 480 cookies. Mohammed and Tetah would produce the maximum quantities of cookies and sweaters if

question

For whom to produce?

answer

Which economic question does the decision to give all of the butter the economy produces to the homeless answer?

question

a mixed capitalist economy

answer

The U.S. economy is best characterized as

question

False.

answer

The opportunity cost of college is the same for all students who are receiving full-tuition scholarships. True or False?

question

True.

answer

A rational decision maker engages in an activity if that activity is more attractive than the best alternative. True or False?

question

the greatest achievable output levels are illustrated

answer

At various points along the production possibilities frontier,

question

True

answer

Specialization often leads to gains in productivity for society as a whole. True or False?

question

benefit, exceeds, cost

answer

When faced with a choice, a person assesses alternatives as long as the expected marginal __________ of gathering more information about the person's opinions __________ the expected marginal _________

question

Society's production possibilities frontier

answer

is based on simplifying assumptions, but is still useful for illustrating scarcity, opportunity cost, and economic growth

question

Robin and Robert may benefit from trading, but there is insufficient information to determine who should specialize in what

answer

If Robin has an absolute advantage in both gardening and baking when compared to Robert, then

question

an increase in the size of the labor force

answer

Which of the following would shift the production possibilities frontier outward?

question

48 cookies

answer

In one week, Mohammed can knit 5 sweaters or bake 240 cookies. The opportunity cost per sweater for Mohammed is

question

True

answer

It is possible for one person to have an absolute advantage in two tasks and a comparative advantage in only one. True or False?

question

inefficiency or unemployment (or both)

answer

Points inside the production possibilities frontier represent

question

currently unattainable combinations of outputs

answer

Points outside the production possibilities frontier represent

question

An improvement in technology

answer

will shift the production possibilities frontier outward but not necessarily to a parallel position

question

painting 1/40 of a room

answer

Helen gives up the opportunity to bake 40 cakes for each room she paints; Josh can paint one room in the time it takes him to bake 60 cakes. The opportunity cost of a cake for Helen is

question

False.

answer

Opportunity cost is objective; therefore, its value does not change as circumstances change. True or False?

question

central planning

answer

Which of the following is not a characteristic of pure capitalism?

question

How to produce

answer

If dairy farmers use automatic milking machines instead of milking by hand, which economic question does their decision answer?

question

buyers are willing and able to purchase at alternative prices

answer

The demand for a product is the amount that

question

True.

answer

Tax preparation services and IRS tax publications can be considered substitutes. True or False?

question

the behavior of buyers and sellers will automatically guide the market toward the equilibrium price and quantity

answer

Economists emphasize the importance of equilibrium in markets because

question

clears the market, leaving neither a surplus nor a shortage

answer

The most important characteristic of the equilibrium price is that it

question

production is characterized by increasing costs

answer

The basic reason that supply curves slope upward is that

question

False.

answer

An improvement in technology shifts the supply curve rightward. True or False?

question

equilibrium price will fall

answer

Two events occur simultaneously in the market for automobiles: (1) an improvement in assembly line technology and (2) the economy enters a recession (which decreases consumers' income). An economist would predict with certainty that

question

exactly matches the independent plans of buyers and sellers

answer

The equilibrium point represents the only price-quantity combination in a market that

question

shift the demand curve for candy

answer

A change in income will

question

an increase in the number of new apartment complexes being built

answer

If the government imposes a ceiling price on apartment rents, we would expect to observe all of the following except one. Which is the exception?

question

an increase in the cost of an important resource used to make that good

answer

Which of the following would shift the supply curve for a good to the left?

question

increase only if supply decreases less than demand increases

answer

If demand increases and supply decreases, quantity will

question

True.

answer

Rent controls mean that tenants end up with the best possible housing choices over the long run. True or False?

question

Surplus

answer

Occurs when quantity supplied exceeds quantity demanded at the equilibrium price

question

All markets provide the same amounts of information.

answer

Which of the following statements about markets is not true?

question

a decrease in the price of corn

answer

Which of the following would cause an increase in the supply of wheat?

question

the price of aspartame will increase

answer

Saccharin and aspartame are both low-calorie substitutes for sugar. If saccharin is found to cause cancer,

question

Demand takes into account the ability to pay.

answer

n what way is consumer demand different from consumer wants?

question

a change in the price of corn

answer

Which of the following will not shift the market supply curve for corn?

question

increase the quantity supplied of labor while decreasing the quantity demanded of labor

answer

Many people argue against increasing the minimum wage because they believe the result would be increased unemployment. Which of the following best summarizes this argument? A higher minimum wage would

question

The supply curve of CD players will shift rightward.

answer

As the use of DVDs becomes more widespread, we would expect all of the following except one. Which is the exception?

question

Opportunity cost of production increases as quantity supplied increases.

answer

Which of the following is the reason supply curves typically slope upward?

question

increased price and increased quantity

answer

If the tea harvest is bad in a particular year, what will happen in the market for coffee?

question

If the price of black beans rose and the consumption of rice increased, they would be substitutes.

answer

Assume that black beans and rice are staples in the diet of one particular family. How could you tell if these goods were complements, substitutes, or unrelated goods?

question

Economists

answer

recognize that tastes have an important impact on demand

question

decrease in the price of bread

answer

An increase in the demand for peanut butter could be caused by a(n)

question

The law of demand

answer

States that price and quantity are inversely related

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