Podcast
Questions and Answers
What is an example of a negative incentive for students to attend class?
What is an example of a negative incentive for students to attend class?
This is an example of a negative incentive for students to attend class.
Which of the following is a normative economic statement?
Which of the following is a normative economic statement?
The government should increase spending during times of economic recession.
According to economic theory, how do people make decisions?
According to economic theory, how do people make decisions?
They make decisions based on their own self-interest.
What does microeconomics focus on?
What does microeconomics focus on?
What is economics the study of?
What is economics the study of?
What issues does an economic system attempt to solve?
What issues does an economic system attempt to solve?
What are economic models used to do?
What are economic models used to do?
An example of a microeconomic decision is when a firm evaluates how much to reduce the price of its product to influence sales and boost profits.
An example of a microeconomic decision is when a firm evaluates how much to reduce the price of its product to influence sales and boost profits.
What is macroeconomics concerned with studying?
What is macroeconomics concerned with studying?
What is the difference between positive statements and normative statements?
What is the difference between positive statements and normative statements?
Which of the following is a positive economic statement?
Which of the following is a positive economic statement?
What does underlying economic theory suggest about choices?
What does underlying economic theory suggest about choices?
What is self-interest in economic terms?
What is self-interest in economic terms?
What is an economic theory also known as?
What is an economic theory also known as?
What is a common approach economists use to understand economic phenomena?
What is a common approach economists use to understand economic phenomena?
Which of the following is a microeconomic topic?
Which of the following is a microeconomic topic?
What is the primary objective of economics?
What is the primary objective of economics?
What best describes the aim of economic theory?
What best describes the aim of economic theory?
Was Sara behaving rationally when she bought the shoes that gave her blisters?
Was Sara behaving rationally when she bought the shoes that gave her blisters?
According to the bounded rationality hypothesis, how does an individual respond to a large number of choices?
According to the bounded rationality hypothesis, how does an individual respond to a large number of choices?
Which of the following would NOT provide an incentive to reduce the amount of beef consumed?
Which of the following would NOT provide an incentive to reduce the amount of beef consumed?
What does the rationality assumption state?
What does the rationality assumption state?
Which is an example of a macroeconomic problem?
Which is an example of a macroeconomic problem?
What is a relationship between two variables called when one variable increases at the same time as the other decreases?
What is a relationship between two variables called when one variable increases at the same time as the other decreases?
What would a macroeconomist study?
What would a macroeconomist study?
What is the rationality assumption?
What is the rationality assumption?
What does it mean when a predictive model is refuted?
What does it mean when a predictive model is refuted?
What might macroeconomics study?
What might macroeconomics study?
What does normative economics involve?
What does normative economics involve?
What is the example of a normative statement?
What is the example of a normative statement?
What are economic resources?
What are economic resources?
In a market system, who determines the what, how and for whom questions in economics?
In a market system, who determines the what, how and for whom questions in economics?
Which of the following statements concerning economic models is FALSE?
Which of the following statements concerning economic models is FALSE?
What is an example of a normative statement?
What is an example of a normative statement?
What is the slope of a straight line?
What is the slope of a straight line?
What would macroeconomists most likely study?
What would macroeconomists most likely study?
According to economics, on what basis do people make decisions?
According to economics, on what basis do people make decisions?
What is a statement with positive economic analysis?
What is a statement with positive economic analysis?
What are economic models?
What are economic models?
Which of the following is a normative economic statement?
Which of the following is a normative economic statement?
What determines the usefulness of a model?
What determines the usefulness of a model?
What is a relationship called when one variable increases at the same time that the other increases?
What is a relationship called when one variable increases at the same time that the other increases?
What is a normative economic statement regarding teenage unemployment?
What is a normative economic statement regarding teenage unemployment?
How do economists assume people behave?
How do economists assume people behave?
What do economists assume people are motivated by?
What do economists assume people are motivated by?
Which of the following statements is a positive economic statement?
Which of the following statements is a positive economic statement?
The study of an individual's choice about what type of computer to buy is a subject of which economists?
The study of an individual's choice about what type of computer to buy is a subject of which economists?
Which of the following would likely be studied in a macroeconomics course?
Which of the following would likely be studied in a macroeconomics course?
What are normative economic statements?
What are normative economic statements?
Study Notes
Incentives and Economic Decisions
- A negative incentive, such as a penalty for missing classes, encourages attendance.
- Individuals typically make decisions based on self-interest, seeking outcomes that benefit them.
Economic Statements
- Normative statements express opinions or value judgments, e.g., "The government should increase spending."
- Positive statements are factual and can be tested, e.g., "The unemployment rate of young African-Americans exceeds that of white Americans."
Microeconomics vs. Macroeconomics
- Microeconomics studies individual decision-makers, such as firms and consumers.
- Macroeconomics examines the economy as a whole, including unemployment levels and overall economic output.
Economic Models and Theories
- Economic models simplify reality to predict outcomes and understand economic phenomena.
- The rationality assumption posits that people aim to make choices that do not leave them worse off.
- A relationship where one variable increases while the other decreases is called an inverse relationship.
Choices and Limited Resources
- Economics focuses on how individuals allocate scarce resources to satisfy unlimited wants.
- Key questions addressed by economic systems: What to produce? How to produce? For whom to produce?
Rational Behavior and Preferences
- Bounded rationality suggests that individuals often use simple rules of thumb to make decisions when faced with complex options.
- Consumers' choices can contradict predictions based on their known preferences.
Normative and Positive Economics
- Normative economics includes statements that involve value judgments, e.g., "All Americans should have access to health care."
- Positive economics involves objective analysis and fact-based statements.
Relationships Between Variables
- Direct relationships occur when both variables increase or decrease together.
- Evaluating economic scenarios includes understanding consumer behavior changes in response to incentives, such as changes in beef prices.
Economists' Assumptions
- Economists typically assume individuals act rationally and are motivated by self-interest.
- The usefulness of an economic model is determined by its explanatory and predictive power.
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Description
Test your understanding of key economic concepts in Chapter 1 of ECO211. This quiz covers topics such as incentives and normative statements, helping students deepen their grasp of economic principles and their application in real-life scenarios.
