Chapter 1 Flashcards
(21 cards)
Which of the following offers the best definition of economics ?
Economics is the study of how people choose to allocate their scarce resources to satisfy their unlimited wants
which of the following situations best and most completely reflects the concept of scarcity
all but 1 of these
which of the following is an example of physical capital
Computers used by a company to record inventory, sales, and payroll.
Which of the following is an example of entrepreneurship ?
A person’s ability to organize the factors of production and manage a business enterprise.
Of the choices provided below, which offers the best definition of scarcity?
b. Less of something is available than people want at a zero price.
- Which of the following best describes the economic concept of rational self-interest?
c. The attempt by people to get a given benefit at least cost, or to get the maximum benefit at a given cost.
________ refers to comparisons of incremental, additional, or small changes in economic conditions relative to the status quo.
d. Marginal analysis
Microeconomics is the study of the economic behavior of entire economies
False – Macroeconomics is the study of the economic behavior of entire economies.
Which of the following best illustrates the application of the scientific method to economics?
Which of the following best illustrates the application of the scientific method to economics?
Which of the following best illustrates the application of the scientific method to economics?
Which of the following best illustrates the application of the scientific method to economics?
b. A labor economist wonders whether unemployment tends to be higher among teenagers than more experienced workers, makes a few necessary assumptions, develops a model, and gathers data to test the hypotheses in the model.
Which of the following best illustrates the “other things equal” assumption?
d. That we hold other factors constant so that we can isolate the effects of a change in a single factor and be confident that it caused the observable effect
When economists utilize the scientific method they must make assumptions. Assumptions based on the expected behavior of economic decision makers are called ________.
c. behavioral assumptions
The fallacy ________ is the incorrect idea that if two variables are associated in time, one must necessarily cause the other.
a. that association is causation
Positive economic statements can be proved or disproved by reference to the facts, while normative economic statements represent opinions that cannot be proved or disproved.
True
Economics is the study:
d. of how people use their limited resources to satisfy their unlimited wants
The need for economic choice arises from scarcity
True
The primary interaction in a market economy is between:
c. households and firms.
Rational self-interest means that individuals try to maximize the expected benefit achieved with a given cost or to minimize the expected cost of achieving a given benefit
True
Rational decision makers will continue to acquire information as long as additional benefit is positive.
False – Rational decision makers will continue to acquire additional information as long as the additional benefits exceed the additional costs.
A simplification of economic reality that is useful to make predictions about the real world is known as economic theory.
A simplification of economic reality that is useful to make predictions about the real world is known as economic theory.
A simplification of economic reality that is useful to make predictions about the real world is known as economic theory
True – Economic theory typically simplifies economic reality so that conclusions are more useful.
False
A theory about how key variables relate to one another is called:
b. a hypothesis
The belief that what is true for the individual is also true for the group is known as:
c. the fallacy of composition.
