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41 Cards in this Set

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What statement would best complete a short definition of ecomomics? "Ecomonics is the study of
b
the efficient use of scarce productive resources"
The idea in economics that "there is no such thing as a free lunch" means that
c
scarce resources have alternative uses or opportunity costs
A major feature of the economic perspective is
comparing marginal benifits with marginal costs
From the economic perspective, when a business decides to emplou more workers, the business decision maker has most likely concluded that the marginal
c
benefits of employing more workers are greater than the marginal costs.
Economic analysis that derives econimic principles about how individuals behave or institutions act is called
d

theoretical economics
The combination of economic theories or principles into a simplified representation of reality is referred to as an econimic
c

model
From the perspective of economists, which of the following would offer the highest degree of confidence for explaining economic behavior
c
a correlation
When economists state that "consumer spending rises when personal income increases," this is an example of
a

a generalization
Another term for the assumption that "other things eqaual" is
a
ceteris paribus
An econimic principle states that the lower the price of a product, the greater the quantity consumers will wish to purchase. This principle is based on the critical assumption that
d
there are no other important changes affecting the demand for the product.
The three basic steps in economic policymaking are
b
state the goal, determine the options, evaluate results
The production of more goods and services and the development of a higher standard of living would be associated with what economic goal?
c
economic growth
Which economic goal is associated with the idea that we want to get the maximum benefit at the minimum cost from the limited productive resources available?
d
economic efficiency
Which economic goal would be most abstract and difficult to measure
c

economic freedom
To say that two economic goals are conflicting means
b
there is a tradeoff in the achievement of the two goals
If economic growth tends to produce a more equitable distribution of income among people in a nation, this relationship between the two economic goals appears to be
c
complementary
When we look at the whole ecomony or its major aggregates, our analysis would be at the level of
b
macroeconomics
Which would be studied in microeconomics?
b
the general level of prices in the U.S. economy
Which is a normative economic statement?
b
The unemployment rate of 6.8% is too high.
Sandra states that "there is a high correlation between consumption and income." Arthur replies that the correlation occurs because "people consume too much of their encome and don't save enough."
c
Sandra's statement is positive and Arthur' statement is normative.
What pitfall to sound reasoning is reflected in a person's that corporate profits are always excessive?
a
bias
During World War II, the United States used price controls to prevent inflation; some people said this was 'a fascist and arbitary restriction of economic freedom," while others said it was "a necessary land democratic means of preventing ruinous inflation." Both labels are examples of
b
loaded terminology
If a farmer grows a larger crop one year, he or she will likely receive more income. Therfore, to reason that if all farmers grew larger crops one year they will likely receive more income is an example of
b
the fallacy of composition
The government increases its expenditures for road construction equipment, and later the average of this equipment falls. The belief that the lowered price wasthe result of the increase in government expendituresis an example of
a
the after this, therfore because of this fallacy
You observe that more education is associated with more income and conclude that more income leads to more education. This would be an example of
b
confusing correlation and causation
Which is the correct match of an ecomonic resource and payment for lthat resource?
d
entrepreneurial ability and profit
An "innovator" is defined as an entrepreneur who
d
introduces new products on the marker or emloys a new method to produce a product
An ecomony is efficient when it has achieved
d
both full employment and full production
Allocative and productive efficiency are conditions that best characterize
b
full production
When a production possibilities schedule is written (or a production possibilites curve is drawn) in this chapter, four assumptions are made. Which is one of those assumptions?
c
The ecomony has both full employment and full production.
At point A on the production possibilities curve in the above illustration,
c
the economy is employing all its resources
The choice of point B over Point A as the optimal product mix for society would be based on
d
a comparison of marginal costs and benefits
Economic growth could be represented by
d
a shift in the production possibilities corve out the point D
What is the economic rationale (reason) for the law of increasing opportunity cost?
b
Economic resources are not completely adaptable to alternative uses.
If there is an increase in the resources available within the economy
b
the economy will be capable of producing more goods and services
Which would be the best example of allocative efficiency? When society devoted resources to the production of
c
computers with word processors instead of typewriters.
Which situation would most likely shift the prodution possibilities curve for a nation in an outward direction?
c
increases in technological advances
The opportunity cost of a new public stadium is the
d
other goods and services that must be sacrificed to construct the new stadium
The choice or alternative B compared with alternative D would tend to promote
b
a faster rate of economic growth
If the economy is producing at production alternative D, the opportunity cost of 40 more units of consumer goods is about
d
20 units of capital goods.
The two kinds of markets found in the circular flow model are
d
product and resource markets