Exam 1 Ch 1&3 Flashcards
(16 cards)
What is Scarcity?
Unlimited wants exceed limited resources.
The basic economic problem of ________ has always existed and will continue to exist.
scarcity
Economists assume that individuals
are rational and respond to incentives.
Economists assume that rational behavior is useful in explaining choices people make ________
even though people may not behave rationally all the time.
In economics, the term ________ means “additional” or “extra.”
marginal
the extra benefit associated with undertaking an activity is called
marginal benefit.
“Scarcity necessitates that people make trade-offs”, this statement is an example of a ________
positive economic statement
“The price of gasoline is too high”, is an example of
a __________
normative economic statement
Which of the following is a macroeconomic question
A) What determines the inflation rate?
B) What determines the production of DVDs?
C) What factors determine the price of carrots?
D) What determines the wage of auto workers?
A) What determines the inflation rate?
The branch of economics which studies how households and firms interact in markets is called
microeconomics
The demand by all the consumers of a given good or service is the ________ for the good or service.
market demand
If a demand curve shifts to the left, then
demand has decreased
Holding everything else constant, an increase in the price of MP3 players will result in
a decrease in the quantity of MP3 players demanded
If an increase in income leads to a decrease in the demand for sardines, then sardines is
an inferior good
If a demand curve shifts to the right, then
demand has increased
Tomas increased his consumption of potato chips when the price of pistachios increased. For Tomas, potato chips and pistachios are
substitutes
