Quiz 1

All of the following are part of an economic model except
a. Assumptions
b. Data
c. Hypotheses
d. Opinions
opinions
By definition, economics is the study of
the choices people make to attain their goals, given their secure resources
An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue.
model
Economists assume that individuals
are rational and respond to incentives.
Which of the following statements is true about scarcity?
Scarcity refers to the situation in which unlimited wants exceed limited resources.
The three fundamental questions that any economy must address are
What goods and services to produce; how will these goods and services be produced; and who receives them?
The highest valued alternative that must be given up to engage in an activity is the definition of
Opportunity Cost
Economists reason that the optimal decision is to continue any activity up to the point where the
marginal benefit equals the marginal cost
The decision about what goods and services will be produced made in a market economy is made by
consumers and firms choosing which goods and services to buy or produce
Which of the following is a positive economic statement?
If the price of iPhones falls, a larger quantity of iPhones will be purchased
Economic models do all of the following except:
a. portray reality in all its minutes details
b. answer economic questions
c. simplify some aspect of economic life.
d. make economic ideas explicit and concrete for use by decision makers
portray reality in all its minutes details
Macroeconomics is the study of
the economy as whole
Microeconomics is the study of
how households and firms make choices
The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of
trade-off
_____________________ is a situation in which a good or service is produced at the lowest possible cost.
Productive efficiency
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