Econ ch 1 and 2

Which of the following lies primarily within the realm of macroeconomics? a study of the demand for gasoline a study of how tax cuts stimulate aggregate production an analysis of supply and demand conditions in the electricity market a study of the impact of "mad cow" disease on the price of beef worldwide

Marginal thinking is best demonstrated by: choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time. deciding to never purchase a coat made with animal skins or furs acquiring the information relevant to a choice before making that choice measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake

Scarcity exists because of: the market mechanism. specialization and division of labor. the allocation of goods by prices unlimited wants and limited resources.

Which of the following best characterizes the circular flow of income? Businesses buy resources from the government, and households buy goods and services from businesses. Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses. The government purchases resources from businesses and households and then sells goods and services to businesses and households. Households buy factors of production from businesses, and businesses buy goods and services from households.

The opportunity cost of an action: can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of the action. can be determined by adding up the bills incurred as a result of the action. can be objectively determined only by economists. is a subjective valuation that can be determined only by the individual who chooses the action.

Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected __________ doesn't change. market economy production firm

As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good. the production possibilities frontier allocative efficiency scarcity utility

In a discussion of economics, which of the following would exert the most influence on an individual firm's decision to hire workers? wage levels the macroeconomy the firm's income household income

In countries like _____________ the command economy predominates. China and Vietnam Cuba and North Korea South Africa and Kenya Germany and France

In the circular flow diagram model: households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses. businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households. households receive revenue for selling goods and services to businesses, and use that revenue to buy inputs from businesses. Both (a) and (b) are correct.

Specialization: leads to greater self-sufficiency. can lead to an increase in overall production. allows workers to develop skills by working on a large number of tasks is always the result of an inefficient use of resources

Economic models like the _____________________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories. financial capital market circular flow diagram financial investment market Specialization Model

Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is: nothing, because he enjoys playing basketball more than studying. the increase in skill he obtains from playing basketball for that hour. the benefit to his grades from studying for an hour nothing, because he had a free pass into the sports complex to play basketball.

Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be. normative statement budget constraint trade-off opportunity cost

Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good. utility marginal analysis the budget constraint consumption

In deciding how many hours to work, Beulah will make a choice that maximizes her _______; that is, she will choose according to her preferences for leisure time and income. budget constraint opportunity set utility production possibilities frontier

Macroeconomics: is concerned with the expansion of a small business into a large corporation. is narrower in scope than microeconomics. analyzes mergers and acquisitions between firms. is concerned with the expansion and contraction of the overall economy.

Macroeconomic topics do not usually include: the profit maximizing decisions of an individual manufacturer. the rate of inflation. the rate of unemployment. economic growth.

Which of the following best denotes the reason for the existence of substantial black markets? a market-oriented economy a command economy government laws and rules the microeconomy

The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending. business government household capital market

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the _________________, sometimes also called the opportunity set, a diagram which shows what choices are possible. consumption set budget constraint original budget income cap

Philosophers draw a distinction between ___________________, which describe the world as it is, and normative statements, which describe how the world should be. negative statements positive statements tradeoffs utilitarianism

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of: all consumers. buyers and sellers. producers and input suppliers. producers and government planning committees.