Flashcards in chapter 1 Deck (16):
"When the government redistributes income by raising income taxes and increasing welfare payments, the economy becomes less equitable."
the economy becomes less equitable
"When economists say, “There is no such thing as a free lunch,” they mean that all economic decisions involve tradeoffs."
"Adam Smith’s “invisible hand” concept describes how corporate business reaches into the pockets of consumers like an “invisible hand."
False; the invisible hand refers to how markets guide self-interested people to create desirable social outcomes
"Rational people systematically and purposefully do the best they can to achieve their objectives."
"Canada will benefit if we eliminate trade with Bangladesh, because we will be forced to produce more of our own clothes."
False;Canada gains from trade
"When a jet flies overhead, the noise it generates is an externality."
"A tax on beer raises the price of beer and provides an incentive for consumers to drink more"
False; higher prices reduce the quantity of demand
"An incentive is something that induces a person to act."
"Sue is better at cleaning and Bob is better at cooking. It will take fewer hours to eat and clean if Bob specializes in cooking and Sue specializes in cleaning than if they share the household duties evenly."
"High and persistent inflation is caused by moderate growth in the quantity of money in the economy"
False; high inflation is caused by excessive monetary growth
"In the short run, a reduction in inflation tends to cause a reduction in unemployment.
FALSE; a reduction in inflation tends to raise unemployment
an auto manufacturer should continue to produce additional automobiles as long as the firm is profitable, even if the cost of the additional units exceeds the price received
False; a manufacturer should produce as long as the marginal benefit exceeds the marginal cost
an individual wheat farmer is likely to have market power
FALSE; a single farmer has no impact on wheat prices
to a student, the opportunity cost of going to a basketball game would include the price of the ticket and the value of the time that could have been spent studying
workers in canada have a relatively high standard of living because canada as a relatively high minimum wage
False; workers in Canada have a high standard of living because they are productive.