Econ 2010 Chapter 1 Questions

Which of the following terms best refers to a fair distribution of economic benefits?

equity

Which of the following involves an estimation of the what the benefits and costs of a particular action are?

positive analysis

Fill in the blank. In economics, as well as in life, optimal decisions are made _______________.

at the margin

What type of statement would “A minimum wage actually reduces employment” be considered?

a postive statement

In what type of economy does the government decide how economic resources will be allocated?

a centrally planned economy

When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?

a market

Which of the following is not an essential component of an economic model?

assumptions

hypotheses

variables

normative statements

normative statements

What is the name given to the practical application of an invention?

an innovation

Which of the following questions could be answered using economics?

 

“How are the prices of goods and services determined?”

“How does pollution affect the economy, and how should government policy deal with these effects?”

“Why do firms engage in international trade, and how do government policies affect international trade?”

All of the above

What is the name given to the development of a new good or a new process for making a good?

an invention

What types of economies require that answers be given to the following questions: what goods and services will be produced, how will the goods and services be produced, and who will receive the goods and services produced?

All types of economies

What does an economy achieve by producing a good or service at the least possible cost?

productive efficiency

Which of the following is not among the fundamental economic questions that every society must solve?

What goods and services will be exhanged?

Fill in the blank: __________ is the study of how households and businesses make choices, how they interact in markets, and how the government influences their choices.

Microeconomics

What type of assessment is one in which a person’s values and political views from part of that assessment?

a normative assessment

What type of economic analysis is concerned with the way things ought to be?

normative analysis

What is the stock of computers, factory buildings, and machine tools used to produce goods better known as?

physical capital

Which of the following questions can be answered using normative economic reasoning?

Should a college cut tuition to stimulate enrollments?

Which of the following is achieved when a good or service is produced up to the point where the marginal benefit to consumers is equal to the marginal cost of producing it?

Allocative efficiency

Which of the following covers the study of topics such as inflation and unemployment?

macroeconomics

OraSure is a medical technology firm based in Pennsylvania that produces medical devices.  Recently OraSure decided to reduce advertising spending for a particular device.  The CEO stated that the advertising had not been as effective as hoped in increasing sales.  Assuming that reducing advertising will reduce OraSure's sales of the device, which of the concepts below is most applicable in solving the problem?

marginal analysis

Which of the following is the best classification for the economies of the United States, Canada, Japan, and Western Europe?

 

pure market economies

mixed economies

centrally planned economies

none of the above

Mixed economies

Human capital is

the accumulated training and skills that workers possess.

Which of the following is an example of a positive question?

 

Should the university offer free parking to students?

Should the university provide more financial aid assistance to students?

If the college increased tuition, would class sizes decline?

Should the college cut tuition to increase enrollments?

If the college increased tuition, would class sizes decline?

Which of the following statements best defines scarcity?

 

Scarcity studies the choices people make to attain their goals.

Scarcity is a situation in which unlimited wants exceed the limited resources available to fulfill those wants.

Scarcity is an imbalance between buyers and sellers in a specific market.

Scarcity refers to a lack of trade-offs.

Scarcity is a situation in which unlimited wants exceed the limited resources available to fulfill those wants.

Which of the following best describes the characteristics of models used in economics?

 

Models are approximations to reality that capture as many details as possible.

Models are usually complex abstractions of reality that simulate practical problems.

Models are concerned with what economic policies ought to be.

Models are simplifications of reality that include only essential elements and exclude less relevant details.

Models are simplifications of reality that include only essential elements and exclude less relevant details

What is the purpose of an economic hypothesis?

to establish a casual relationship

Which of the following terms summarizes the situation in which a buyer and a seller exchange a product in a market and, as a result, both are made better off by the transaction?

 

productive efficiency

allocative efficiency

voluntary exchange

equity

Voluntary Exchange