Final Exam Flashcards
Since air is limited in supply, it is scarce in the economic sense.
F
Adam Smith is the Father of Economics.
T
Economic resources include labor, capital, natural resources, money, and human capital.
F
Voluntary trade between Maria and Alex benefits both individuals, and voluntary trade between Iceland and Ireland benefits both countries, but trade between Iceland and Ireland does not necessarily benefit all individuals in the two countries.
T
George has spent a long time on a project, and it now seems that the marginal benefit of completing the project is less than the marginal cost of completing it. Nevertheless, if George is rational, he will complete the project anyway, because he has already spent so much time working on it.
f
Market failures include monopoly, public goods, common resources, externalities, and asymmetric information.
T
The opportunity cost to Madison of attending Utah State University is her cost of tuition, books, and living expenses.
F
The modern Scientific Method is based primarily on inductive logic.
F
In order to be useful, assumptions must be true statements about the world.
F
In the scientific method, after testing, the researcher either rejects or accepts the hypothesis.
F
Economic policy is “positive economics,” while economic science is “normative economics.”
f
If Canada has labor that is twice as productive as labor in Bulgaria, then the standard of living in Canada will be about twice as high as the standard of living in Bulgaria.
T
Choices are necessary because of scarcity.
T
Your friend Marcus says, “I need a new cellphone,” but as an economist you know that he doesn’t need a new cellphone, he only wants one.
T
Services are tangible and goods are intangible.
F
The opportunity cost of using a resource in one way is the value of the best alternative use of the resource.
T
Economists believe that markets are usually a good way to organize economic activity.
T
Government can never improve the market outcome.
f
The wealth of a nation is primarily determined by the nation’s labor-force participation rate.
F
There is a trade-off in the long run between unemployment and inflation, but not in the short run.
F
The role of an economic advisor is to determine economic policy.
f
David Ricardo proposed the Principle of Absolute Advantage as the determinant of trade patterns, but Adam Smith proposed the more general Principle of Comparative Advantage as the determinant of trade patterns.
F
Because Venezuela has experienced rapid inflation, the government must have printed too much money.
T
In a market, if you have to pay for something, it must be scarce.
T
If Sam can score 16 points and gain 5 rebounds per game, while Neemias can score 18 points and gain 10 rebounds per game, then Neemias has an absolute advantage and a comparative advantage in both scoring and rebounding.
F
If Friday can produce 20 palm leaves or 20 coconuts in a day, while Crusoe can produce 15 palm leaves or 30 coconuts in a day, it will pay Friday to produce extra palm leaves and trade them to Crusoe for extra coconuts. If this happens, both Friday and Crusoe can consume more than they can produce without trade.
T
If USU wants to achieve its primary goal of excellent teaching, then it must establish incentives that are compatible with that goal.
T
The most important determinant of price elasticity of demand is the length of time over which demand is measured.
F
The demand for Fredrico’s pizza is more elastic than is the demand for Italian food.
T
Price elasticity of supply is defined as the percentage change in quantity supplied divided by the percentage change in price on a supply curve.
T
If a linear supply curve intersects the quantity axis, it will have elasticity greater than 1
F
A linear supply curve that intersects the origin has E=1.
T
