chapter 1: the principles and praticals of economics

Question 1

an example of subjective judgement would be:

Answer 1

• the value of a rock from the moon
• how much risk one is willing to accept to receive a gain
• what level of saving a person will make for future expenditures

Question 2

_________ is the study of how households and businesses make choices, how they interact in markets, and how government influences their choices

Answer 2

microeconomics

Question 3

macroeconomics can be used to understand all of the topics listed below, except:

Answer 3

how a consumer decides between the purchase of two different cars

Question 4

a free rider is a person who:

Answer 4

receives benefit from a good without paying for it

Question 5

two events, A and B tend to happen together, i.e., they are correlated. what would best describe their causation?

Answer 5

• A causes B, a direct causation
• A and B result from a third event, C
• B causes A, an indirect causation

Question 6

macroeconomics is concerned with all of the following except:

Answer 6

political party affiliation

Question 7

“people nod fundamentally good ”

Answer 7

is a normative statement

Question 8

according to the rationality assumption, people:

Answer 8

do not intentionally make decisions that would leave them worse off

Question 9

the optimal economic decision is to continue activity, investing or otherwise, up to the point where:

Answer 9

the additional benefit of the activity is at least more than the additional cost of the activity

Question 10

economics is the study of choice under conditions of:

Answer 10

scarcity

Question 11

a definition of opportunity cost is:

Answer 11

the value of the best thing that you give up to get something else

Question 12

analysing data or evidence is called

Answer 12

empiricism

Question 13

which of these covers the study of topics such as inflation and unemployment

Answer 13

macroeconomics

Question 14

selecting the best feasible option among available manufacturing options is called:

Answer 14

optimisation

Question 15

when an investment counselor advises. client as to the risk/return trade-off on an investment, this type of help is called ___________ economics

Answer 15

perspective

Question 16

economic activities that are feasible have what characteristics

Answer 16

affordable and available

Question 17

economics

Answer 17

is concerned with how people make choices

Question 18

facts, measurements, or statistics used to describe something specific are collectively known as

Answer 18

data

Question 19

which of the following is a positive economic statement:

Answer 19

if minimum wage rates rise, the unemployment will rise

Question 20

empiricism is

Answer 20

analysing data or evidence

Question 21

which of the following is an economic agent:

Answer 21

• charity
• corporation
• labor union

Question 22

the measure of benefits minus (-) cost equals (=)

Answer 22

net benefit

Question 23

the opportunity cost of lying in the sun to get a tan is:

Answer 23

• the potential skin problems that could result from sunlight exposure
• the next best activity could do instead of lying in the sun
• the time you take to lie in the sun

Question 24

costs that cannot be recovered and therefore aren’t relevant to a decision for a future activity are called __________ costs

Answer 24

sunk costs

Question 25

if the president of columbia commented that “we should do something to reduce inflation in columbia”, this would be an example of

Answer 25

a normative statement

Question 26

which of these is a macroeconomic study

Answer 26

the study of how fast prices in general are rising

Question 27

which of the following is not a possible opportunity cost of attending college

Answer 27

the cost of housing