Economics Chapter 1 Quiz & Flashcards for Mastery

Questions and Answers

What is the disagreement among economists typically revolves around?

Microeconomics

Positive economics

Normative economics (correct)

Macroeconomics

If economists examine the relationship between the price of a good and sales of that good while ignoring other related factors, they are using which of the following?

Ceteris paribus (correct)

Macroeconomics

Normative economics

Microeconomics

Which discipline studies the decision-making process of customers, workers, households, and business firms on an individual basis?

Microeconomics

Economic principles are generalized statements that ______ consumer behavior.

look at typical Signup and view all the answers

What is the focus of positive economics?

Cause-and-effect relationships and facts Signup and view all the answers

The ____ problem refers to the need to make choices because economic wants exceed economic means.

economizing Signup and view all the answers

As a result of our incomes and wants, it is in our self-interest to economize.

limited; insatiable Signup and view all the answers

______ economic resources means limited goods and services.

Scarce Signup and view all the answers

What do combinations of output that fall inside the production possibilities curve represent?

Goods that are attainable and less total outcome than points on the curve Signup and view all the answers

What is the cause of a society's increasing opportunity costs with respect to the production of goods?

Resources that are not fully interchangeable Signup and view all the answers

The assumption behind purposeful behavior is that ______.

people act in such a way as to rationally pursue their own interests Signup and view all the answers

When people get satisfaction from charitable giving, they are ______.

acting out of rational self-interest Signup and view all the answers

Because consumers behave in a rationally self-interested manner, the consumer will purchase a good or service ______.

when the marginal benefit is greater than the marginal cost Signup and view all the answers

Economic principles are generalizations that are ______.

expressed as the tendencies of average consumers, workers or firms Signup and view all the answers

In a world of scarcity, ______.

the decision to obtain the marginal benefit (MB) of a specific option always includes the marginal cost (MC) of forgoing something else Signup and view all the answers

A statement about economic behavior or the economy that enables prediction of the probable effects of certain actions is known as a(n) ______.

economic principle Signup and view all the answers

_____ is the discipline that examines the performance and behavior of an economy as a whole.

Macroeconomics Signup and view all the answers

When economists consider the output of all U.S. businesses as a single entity, they are treating them as a(n) ______.

aggregate Signup and view all the answers

True or false: Positive economics encourages value judgments.

False Signup and view all the answers

Normative economics is ______.

based on value judgments Signup and view all the answers

True or false: Everyone except for the super wealthy has a finite, or limited, amount of income.

False Signup and view all the answers

For better or worse, people have ______.

virtually unlimited wants Signup and view all the answers

Which of the following describes a budget line?

A curve showing various combinations of two products a consumer can purchase with a specific amount of income. Signup and view all the answers

What does every point on a budget line graph represent?

All combinations of goods that can be purchased with a given income Signup and view all the answers

Which of the following combinations are unattainable given a consumer's budget line?

Combinations that fall beyond the budget line Signup and view all the answers

True or false: A decrease in income will shift the budget line to the left.

True Signup and view all the answers

_____ lists the different combinations of two products that can be produced with a specific set of resources, assuming full employment.

Production Possibilities Table Signup and view all the answers

Points lying ______ the production possibilities curve represent greater, but unachievable levels of output with current inputs than that at any point on the curve.

outside Signup and view all the answers

Positive economics value judgments, tries to establish statements about economic behavior, and deals with __ economic events.

avoids; scientific; actual Signup and view all the answers

What best describes the combination of goods that lie on the production possibilities curve?

They are attainable; they utilize the economy's available resources Signup and view all the answers

An increase in income will ______.

shift the budget line to the right Signup and view all the answers

Which of the following are ways of expressing the meaning of ceteris paribus?

Both A and B Signup and view all the answers

A consumer's ____ line or constraint shows various combinations of two products that can be purchased with a specific amount of income.

budget Signup and view all the answers

Which of the following are issues most explored in microeconomics?

All of the above Signup and view all the answers

The straight-line budget constraint indicates ______ opportunity cost.

constant Signup and view all the answers

Trade-offs arising from limited resources give rise to ______.

opportunity costs Signup and view all the answers

Consumers must make choices about what to buy and what to forgo to fulfill wants because ______.

consumers' incomes are limited Signup and view all the answers

A production possibilities curve (PPC) illustrates the attainable combination ______.

of two goods that can be produced given a specific set of resources Signup and view all the answers

A production possibilities curve with an increasing slope is the result of which of the following?

The law of increasing opportunity costs Signup and view all the answers

When an economy produces a good such that the marginal benefit equals the marginal cost, this indicates that ______.

resources are being allocated efficiently Signup and view all the answers

Points lying ______ the production possibilities curve are attainable but reflect less total output than can be produced.

inside Signup and view all the answers

Which of the following is true of positive economics?

All of the above Signup and view all the answers

Study Notes

Economic Concepts and Definitions

Normative economics involves disagreements among economists regarding value judgments.
Ceteris paribus is a key principle that means "other things being equal," allowing economists to isolate the effects of one variable.
Microeconomics studies decision-making processes of individuals, such as consumers and businesses, rather than entire economies.
Economic principles generalize consumer behavior based on typical patterns of individuals and markets.

Economic Relationships

Positive economics focuses on factual cause-and-effect relationships without value judgments.
The economizing problem arises when economic wants surpass available resources, necessitating choices.
Limited incomes and insatiable wants drive people to choose goods and services that maximize satisfaction.
Scarcity implies limited economic resources, leading to constrained goods and services.

Production and Opportunity Costs

Output combinations inside the production possibilities curve signify attainable levels of production but are not optimal.
Increasing opportunity costs occur because resources are not fully interchangeable among different goods.
Purposeful behavior assumes individuals act rationally to pursue their interests, including satisfaction from charitable acts.
Rational self-interest guides consumers to purchase goods when marginal benefits outweigh marginal costs.

Budget Constraints

A budget line illustrates combinations of two goods available for purchase with a specific income level.
Points on a budget line represent all attainable combinations of goods under current financial limits; combinations beyond this line are unattainable.
A decrease in income shifts the budget line left, indicating fewer goods can be purchased.
An increase in income results in a rightward shift of the budget line, expanding purchasing possibilities.

Production Possibilities and Efficiency

The Production Possibilities Table outlines various production combinations possible with given resources, assuming full employment.
Points outside the production possibilities curve indicate unattainable output levels with current inputs.
Efficient resource allocation is achieved when production occurs at a point where marginal benefit equals marginal cost.
Points inside the production possibilities curve signify underutilization of resources and less total output.

Key Economic Terms

Economic principles serve as predictive statements about the economy's behavior, based on empirical evidence.
Macroeconomics studies the performance of the economy as a whole, often involving aggregates of all businesses.
The straight-line budget constraint represents constant opportunity costs, while trade-offs from limited resources lead to the identification of opportunity costs.

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Test your knowledge with these flashcards covering key concepts from Chapter 1 of Economics. Explore terms like normative economics and ceteris paribus, and understand the foundational principles that shape economic decision-making. Ideal for beginners looking to reinforce their understanding of economics.

Economics Chapter 1 Flashcards

Questions and Answers

What is the disagreement among economists typically revolves around?

If economists examine the relationship between the price of a good and sales of that good while ignoring other related factors, they are using which of the following?

Which discipline studies the decision-making process of customers, workers, households, and business firms on an individual basis?

Economic principles are generalized statements that ______ consumer behavior.

What is the focus of positive economics?

The ____ problem refers to the need to make choices because economic wants exceed economic means.

As a result of our ______ incomes and ______ wants, it is in our self-interest to economize.

______ economic resources means limited goods and services.

What do combinations of output that fall inside the production possibilities curve represent?

What is the cause of a society's increasing opportunity costs with respect to the production of goods?

The assumption behind purposeful behavior is that ______.

When people get satisfaction from charitable giving, they are ______.

Because consumers behave in a rationally self-interested manner, the consumer will purchase a good or service ______.

Economic principles are generalizations that are ______.

In a world of scarcity, ______.

A statement about economic behavior or the economy that enables prediction of the probable effects of certain actions is known as a(n) ______.

_____ is the discipline that examines the performance and behavior of an economy as a whole.

When economists consider the output of all U.S. businesses as a single entity, they are treating them as a(n) ______.

True or false: Positive economics encourages value judgments.

Normative economics is ______.

True or false: Everyone except for the super wealthy has a finite, or limited, amount of income.

For better or worse, people have ______.

Which of the following describes a budget line?

What does every point on a budget line graph represent?

Which of the following combinations are unattainable given a consumer's budget line?

True or false: A decrease in income will shift the budget line to the left.

_____ lists the different combinations of two products that can be produced with a specific set of resources, assuming full employment.

Points lying ______ the production possibilities curve represent greater, but unachievable levels of output with current inputs than that at any point on the curve.

Positive economics ______ value judgments, tries to establish ______ statements about economic behavior, and deals with ______ economic events.

What best describes the combination of goods that lie on the production possibilities curve?

An increase in income will ______.

Which of the following are ways of expressing the meaning of ceteris paribus?

A consumer's ____ line or constraint shows various combinations of two products that can be purchased with a specific amount of income.

Which of the following are issues most explored in microeconomics?

The straight-line budget constraint indicates ______ opportunity cost.

Trade-offs arising from limited resources give rise to ______.

Consumers must make choices about what to buy and what to forgo to fulfill wants because ______.

A production possibilities curve (PPC) illustrates the attainable combination ______.

A production possibilities curve with an increasing slope is the result of which of the following?

When an economy produces a good such that the marginal benefit equals the marginal cost, this indicates that ______.

Points lying ______ the production possibilities curve are attainable but reflect less total output than can be produced.

Which of the following is true of positive economics?

Study Notes

Economic Concepts and Definitions

Economic Relationships

Production and Opportunity Costs

Budget Constraints

Production Possibilities and Efficiency

Key Economic Terms

Studying That Suits You

Description

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