Econ Chapter 1

Which of the following statements best describes the study of economics? Economics studies how C. we make choices in the face of scarcity. D. to create incentives so that scarcity does not exist. E. businesses reach decisions. A. to organize production so that scarcity does not occur. B. firms make profits.

The characteristic from which all economic problems arise is D. hunger. C. how to make a profit. B. providing a minimal standard of living for every person. A. political decisions. E. scarcity.

To economists, scarcity means that" E. unlimited wants cannot be satisfied by the limited resources. "D. there can never be answers to the what, how or for whom questions." C. the number of people without jobs rises when economic times are bad. A. limited wants cannot be satisfied by the unlimited resources.

Huey has eaten two hamburgers and is considering the third. The marginal benefit in his decision is the pleasure from consuming A. the two previous hamburgers. C. just the third hamburger. E. the third hamburger minus the pleasure from consuming zero hamburgers. D. just the second hamburger.

Decision making on the margin involves D. determining the total benefits of a decision. E. comparing the benefits from the social interest to the benefits from the person's self-interest. A. comparing the marginal cost and marginal benefits when making a decision. C. eliminating the additional cost when making a decision. B. comparing the total cost and the total benefit when makin

which of the following is not considered one of the factors of production? D. technology C. capital B. labor A. land E. entrepreneurship

The satisfaction of pleasure one gets from consuming a good or service is called: consumption preferences utility price

Which expression is another way of saying "marginal cost"? total cost scarcity additional cost average cost

Henry wants to buy a book. The economic perspective suggests that Henry will buy the book if: the book will give him utility his income is high the marginal cost of the book is greater than its marginal benefit the marginal benefit of the book is greater than its marginal cost

The purpose of the ceteris paribus assumption used in economic analysis is to: avoid making positive statements. make sure that all relevant factors are considered. avoid making normative statements. restrict analysis to the effect of a single economic factor

A basic assumption used in most economic theories is that: as price decreases, quantity demanded will decrease. what is true for a part of the whole must also be true for the whole. whatever goes up must come down. all other things remain the same.

If a consumer has an income of $200, the price of X is $5, and the price of Y is $10, the maximum quantity of X the consumer is able to purchase is: 10 5 20 40

The law of increasing opportunity cost explains why the shape of the production possibilities curve is: a straight line from one axis to the other. bowed inward (convex) to the origin of the graph. a straight line parallel to the horizontal axis. bowed out (concave) from the origin of the graph.

opportunity cost is best defined as: the value of the best forgone alternative. the money cost of an economic decision. marginal cost minus marginal benefit. the time spent on an economic activity.

Increases in resources or improvements in technology will tend to cause a society's production possibilities curve to: become vertical. shift inward or to the left. shift outward or to the right. become horizontal.

Capital is a factor of production. An example of capital as a factor of production is A. money. E. education. C. bonds. D. machines.

"Buy 2, get 1 free." Explain why the "1 free" is free to the buyer but not to the society.

Cite one example of recent decision that you made in which you, at least implicitly, weighed marginal cost and marginal benefit.

What's an inverse relationship? And what's a direct relationship? Offer two variables that might have direct relationship.

According to the data offered by the local Walmart, the manage noticed that when summer comes, the amount of ice cream sold is usually higher than the one during the winter time. There is a hypothesis from the manager that there is a relationship between the the amount of ice cream consumption and temperature. If you were the manager, (1) what relationship you would expect between the two variables? (2) which one will be the independent variable and which one is the dependent variable? (3) will the slope be positive or negative if the graph constructed? (4) if you think these two variables are independent of one another, briefly explain your reason.