Macroecon Ch1

The economic problem of _____ arises because human wants and desires are unlimited and the means to satisfy these wants are limited.

Scarcity

Economics is a branch of social science that studies:

how people choose to allocate limited resources to satisfy their unlimited wants.

_____ due to the scarcity of resources.

 People cannot satisfy all their wants

Resource allocation in a market economy is determined primarily through interactions between:

households and firms.

Which of the following is true of resource markets?

Factors of production are bought and sold in these markets.

Which of the following is an example of a resource market?

A job market

The _____ shows the flow of resources, products, income, and revenue among economic decision makers.

circular-flow model

The circular-flow model shows that _____ supply labor, capital, natural resources, and entrepreneurial ability to resource markets.

households

The circular-flow model shows that firms produce ____ which are demanded by households through product markets.

goods and services

One of the main assumptions in economics is that:

people are rational.

The economic concept of _____ is the attempt made by people to minimize the expected cost of achieving a given benefit.

rational self-interest

The lower the personal cost of helping others, _____.

the more help we offer

Which of the following are necessary to make a rational choice?

Time and information, which are both scarce and valuable

Rational decision makers continue to acquire information as long as:

the additional benefit expected from that information exceeds the additional cost of acquiring it.

_____ refers to incremental, additional, or small changes in economic conditions relative to the status quo.

Marginal analysis

Which of the following is true of an economic choice?

Economic choice is based on a comparison of the expected marginal benefit and the expected marginal cost of the action under consideration.

A company is likely to _____ before launching a new product in a market.

conduct a marginal analysis

A simplification of economic reality that is used to make predictions about the real world is known as a(n)_____.

economic theory

Identify a feature of an economic theory.

It does not spell out every detail and interrelation.

An economic theory is characterized as a good theory if:

it helps in sorting and understanding information.

The economics profession thrives because:

economic models help to explain complicated scenarios in a better way than other alternative approaches.

The earnings of workers _____.

depend on the highest degree earned

Which of the following statements is true?

The median pay of economics majors increased more in dollar terms than any other majors in 2015.