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Questions and Answers
The assertion that "there is no free lunch" means that
The assertion that "there is no free lunch" means that
Even though local newspapers are very inexpensive, people rarely buy more than one of them each day. This fact
Even though local newspapers are very inexpensive, people rarely buy more than one of them each day. This fact
Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students. This example illustrates
Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students. This example illustrates
Which of the following terms implies the least degree of confidence in an economic generalization?
Which of the following terms implies the least degree of confidence in an economic generalization?
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The Latin term "ceteris paribus" means
The Latin term "ceteris paribus" means
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Suppose an economist says that "other things equal, the lower the price of bananas, the greater the amount of bananas purchased." This statement indicates that
Suppose an economist says that "other things equal, the lower the price of bananas, the greater the amount of bananas purchased." This statement indicates that
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Which of the following is a microeconomic statement?
Which of the following is a microeconomic statement?
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A positive statement is one that
A positive statement is one that
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The budget line shows
The budget line shows
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In moving along a given budget line,
In moving along a given budget line,
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Study Notes
Economic Concepts
- "There is no free lunch" signifies that every economic decision involves trade-offs due to the use of scarce resources.
- Marginal benefit analysis is critical; for many, the benefit of consuming an additional unit (like a second newspaper) is outweighed by its cost.
Opportunity Costs
- Choosing to invest in computers over parking illustrates opportunity costs, emphasizing that funds allocated to one area cannot be spent on another.
- Economic choices hinge on assessing opportunity costs, as they represent the value of the next best alternative.
Confidence in Economic Generalizations
- Among economic terms, "hypothesis" reflects the least confidence in a generalization, ranking below "law," "principle," and "theory."
Ceteris Paribus
- The Latin phrase "ceteris paribus" means "other things equal," a foundational concept in economics that isolates the effect of one variable while holding others constant.
Relationship Between Price and Quantity
- A statement indicating that the quantity purchased of a good, like bananas, rises as the price falls assumes all other factors remain constant.
Microeconomic Statements
- Microeconomic analysis often focuses on specific markets; for example, a decline in smartphone prices reflects a microeconomic statement.
Positive vs. Normative Statements
- A positive statement in economics is objective, focusing on factual descriptions and relationships rather than value judgments.
Budget Line
- The budget line represents all combinations of two goods that can be purchased within a specific income and price constraints, indicating the trade-offs consumers face.
Changes Along Budget Line
- When moving along a budget line, prices of goods remain constant while the consumer's income does not influence the line directly.
Understanding Opportunity Cost in Graphs
- Opportunity cost can vary between graphical representations; determining which graph showcases the lowest opportunity cost for goods like beer will require analysis of their respective slopes.
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Prepare for your Microeconomics Exam 1 with these comprehensive flashcards. Each card presents key concepts and definitions that are essential for understanding the subject. Test your knowledge and improve your grasp of microeconomic principles.
