question

Normative, value-based policy questions or statements give rise to:

answer

Controversy or disagreement among economists

question

A statement about economic behavior or economy that enables prediction of the probable effects of certain actions is known as an:

answer

Economic theory/principle

question

Normative economics is:

answer

Based on value judgments

question

__________ economics focus on facts and cause-and-effect relationships:

answer

Positive

question

What defines "ceteris paribus"?

answer

The idea that factors other than those being considered in a particular analysis do not change/other-things-equal assumption.

question

Economic principles are generalizations relating to __________ tendencies in economic behavior or to the economy itself:

answer

Average

question

In macroeconomics, an __________ is a collection of specific economic units treated as if they were one unit:

answer

Aggregate

question

What markets are in the circular flow model?

answer

Resource market/product market

question

What best clarifies the "other-things-equal" assumption?

answer

All variables except those under immediate consideration are held constant for a particular analysis.

question

Disagreements among economists involve ______, value based policy questions.

answer

Normative

question

The economic term that means incremental change or additional changes is ________:

answer

Marginal

question

What defines positive economics?

answer

1. A focus on facts and cause-and-effect relationships. 2. A focus on theory development and testing. 3. A focus on scientific statements about economic behavior.

question

At an output level that is greater than what is optimal:

answer

The marginal cost of producing that good is greater than the marginal benefit.

question

Economic principles are generalizations expressed as:

answer

The tendencies of typical or average consumers, workers, or business firms

question

True or false: Positive economics encourages value judgments:

answer

False

question

The concept that "there is no free lunch" reflects the notion that:

answer

Scarce resources are used to produce so called "free goods" that have alternative uses that are given up in order to produce said "free" goods.

question

When individuals make decisions with some desired outcome in mind, they are engaging in:

answer

Purposeful behavior.

question

What describes the concept of rational self interest?

answer

1. Individuals allocate their resources to maximize their satisfaction. 2. Individuals weigh the cost and benefits of their decisions. 3. Individuals look for and pursue opportunities to increase their utility.

question

Economists develop theories of the ______ of individuals (consumers/workers) and institutions (businesses/governments) engaged in the production, exchange, and consumption of goods and services:

answer

Behavior

question

Because individuals weigh cost and benefits, their economic decisions are _______

answer

Rational.

question

Consider the relationship between the price and quantity of green apples purchased. Any other factors such as the price of red apples, incomes, and tastes and preferences are not considered. What assumption should be considered?

answer

Ceteris paribus

question

Consider the relationship between gas and the quantity of gas consumed by drivers. If we are to consider the price of gas as the only factor affecting the quantity of gas consumed, while holding other factors such as drivers' incomes and tastes and preferences irrelevant, then we are invoking:

answer

Ceteris paribus/the other-things-equal assumption

question

What consists of the physical actions and mental activities that people contribute to the production of goods and services?

answer

Labor

question

In addition to entrepreneurship, the resource defined as _______ consists of the physical actions and mental activities that people contribute to the production of goods and services.

answer

Labor

question

For economists, ______ goods includes all manufactured aids used in producing consumer goods and services.

answer

Capital

question

Combinations of goods that fall beyond the production possibilities curve:

answer

Require economic growth/currently are unattainable/would require resources that are not currently available

question

Which points or combinations of produced goods on a production possibilities curve are not attainable with the current level of resources?

answer

Those lying beyond the curve.

question

Combinations of goods that fall inside the production possibilities curve represent:

answer

Less total output in an economy/goods that are attainable/inefficient use of resources

question

Each point on the production possibilities curve represents some ______ of two products.

answer

Output combination

question

Arable land, water, machinery and a professional baseball player are all considered scarce economic ________ to production.

answer

Inputs

question

Capital goods differ from consumer goods in that:

answer

Capital goods satisfy consumer wants indirectly through the production of consumer goods/consumer goods satisfy wants directly

question

Factories, storage, transportation and distribution facilities, as well as tools and machinery are all examples of physical _____ goods.

answer

Capital

question

Specialization is about an individual or firm using available resources to:

answer

Produce one or only a few goods and services.

question

Points lying _____ the production possibilities curve are attainable, but they reflect less total output and therefore are not as desirable as points on the curve.

answer

Inside

question

Each point on the production possibilities curve represents some ______ of two products

answer

Output combination

question

Economists do not include money as an economic resource because:

answer

Money produces nothing

question

What best describes the relationship between the trade-offs and opportunity cost?

answer

As you give up consumption or production of one good over another, an opportunity cost is incurred.

question

A nation's production possibilities curve can shift outward:

answer

With an increase in the quality and quantity of resources/Through the use of improved production techniques/As a result of specialization and trade

question

Constant opportunity cost is best exemplified through:

answer

The straight-line production possibilities

question

Which best exemplifies the relationship between a capital good and a consumer good or service?

answer

A commercial baking oven and loaves of bread

question

The law of increasing opportunity costs is driven by:

answer

Resources that are not perfectly flexible or interchangeable

question

True or false: Consumer expectations are a determinant of supply:

answer

False

question

Producer expectations of future prices are a determinant of ________:

answer

Supply

question

Diminishing ______ states that, in any specific time period, buyers will derive less satisfaction from each additional unit of the product consumed.

answer

Marginal utility

question

Which best describes the law of demand?

answer

All other things being equal, as price decreases, quantity demanded increases/All other things being equal, as price increases, quantity demanded decreases

question

Products whose demand varies directly with changes in money or income are called normal goods, or ______ goods:

answer

Superior

question

True or false: If demand for a good increases when consumer incomes rise, then the good is considered "inferior":

answer

False

question

A change in demand occurs due to a change in the consumer's mind about purchasing a product that is based on something other than the _______ of the product:

answer

Price

question

What type of goods affect the demand for a product due to a change in their price?

answer

Substitute/Complimentary goods

question

The market demand curve is the ______ of all ______ demand curves for a good or service:

answer

Summation; individual

question

What are determinants of supply?

answer

Taxes and subsidies/Technology/Resource prices

question

Consumers experience _______ marginal utility the more they consume of a particular good or service:

answer

Diminishing

question

A normal good is an item for which demand ______ when income rises and ______ when income falls:

answer

Increases; decreases

question

What decreases demand?

answer

Falling incomes and the product is a normal good/An unfavorable change in consumer tastes/A decrease in the price of a substitute good.

question

The added cost of producing one more unit of output is called _______ cost:

answer

Marginal

question

What would cause a decrease in demand?

answer

A fall in income and the good is normal.

question

Other things equal, as buyer's income rises, the willingness and ability to buy a normal product ______:

answer

Rises

question

True or false: A complementary good is one that is used in place of another good:

answer

False

question

The demand curve can shift _______ or _______ when a factor other than price affects consumption of a good or service:

answer

Left; right

question

The concept of demand can be summarized by a schedule or curve showing the quantity of a product that would be:

answer

Consumed at various possible prices

question

A favorable change in consumer tastes and preferences for a product will ______ demand, shifting the demand curve to the _______:

answer

Increase; right

question

What is a determinant of demand?

answer

Income

question

For every good or service, the quantities demanded by individual consumers at every price are added together to compute:

answer

The market demand curve for a good or service

question

When the government provides financial assistance for the production of a good which lowers producers' costs and increases supply, it is called a ________:

answer

Subsidy

question

Market ________ is a schedule or curve showing the various amounts of a product that producers are willing and able to make available for sale at each possible price during a specific period:

answer

Supply

question

Diminishing marginal utility states that less satisfaction is derived from each successive unit of a product consumed. Therefore, the law of demand is upheld because, as each successive unit yields ______, consumers will buy additional units only if the price of those units is progressively _______:

answer

Less and less utility; reduced

question

What summarizes the determinants of demand and their net effect on the demand curve?

answer

An increase in income will shift the demand curve to the right for a normal good and shift the demand curve to the left for an inferior good/A change in hte number of buyers will increase or decrease demand and shift the demand curve to the right or left respectively/A change in consumer expectations will increase or decrease demand and shift the curve to the right or left respectively/A change in the price of a related good will increase or decrease demand and shift the demand curve to the right or left respectively.

question

Price and quantity supplied have a ________ relationship:

answer

Positive

question

A change in quantity demanded is caused by an increase or decrease in the ______ of the product under consideration and nothing else:

answer

Price

question

True or false: Changes in the determinants of demand will cause a movement along the demand curve:

answer

False

question

A change in ________ refers to a movement along the demand curve in response to changes in the price of a good or service, whereas a change in _______ refers to a shift of the demand curve leftward or rightward in response to anything other than changes in the price of a good or service:

answer

Quantity demanded; demand

question

If the government subsidizes the production of a good, it in effect _______ the producers' costs and _______ supply:

answer

Lowers; increases

question

What does not shift the supply curve?

answer

The price of the product itself

question

True or false: The market supply curve is derived by summing up the producers' individual demand curves for a good or service:

answer

False

question

The supply curve is _______ sloping curve:

answer

upward

question

An increase in equilibrium quantity and indeterminate result on equilibrium price is a result of:

answer

A simultaneous increase in supply and demand

question

If a decrease in supply is larger than a decrease in demand the equilibrium price will ______:

answer

Increase

question

A shortage results from an excess of quantity _______:

answer

Demanded

question

If an increase in supply is larger than a decrease in demand, the equilibrium quantity will ________:

answer

Rise

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