Chapter 1 part 1
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Questions and Answers

Resources are

  • scarce for households but plentiful for economies.
  • plentiful for households but scarce for economies.
  • scarce for households and scarce for economies. (correct)
  • plentiful for households and plentiful for economies.

    • The overriding reason as to why households and societies face many decisions is that

  • resources are scarce. (correct)
  • goods and services are not scarce.
  • incomes fluctuate with business cycles.
  • people, by nature, tend to disagree.

    • Economics is the study of

  • production methods.
  • how society manages its scarce resources. (correct)
  • how households decide who performs which tasks.
  • the interaction of business and government.

    • A tradeoff exists between a clean environment and a higher level of income in that

    <p>laws that reduce pollution raise costs of production and reduce incomes.</p> Signup and view all the answers

    What you give up to obtain an item is called your

    <p>opportunity cost.</p> Signup and view all the answers

    A furniture maker currently produces 100 tables per week and sells them for a profit. She is considering expanding her operation in order to make more tables. Should she expand?

    <p>It depends on the marginal cost of producing more tables and the marginal revenue she will earn from selling more tables.</p> Signup and view all the answers

    When you calculate your true costs of going to college, what portion of your room-and-board expenses should be included?

    <p>You should include only the amount by which your room-and-board expenses exceed the expenses for rent and food if you were not in college.</p> Signup and view all the answers

    Mallory decides to spend three hours working overtime rather than watching a video with her friends. She earns $8 an hour. Her opportunity cost of working is

    <p>the enjoyment she would have received had she watched the video.</p> Signup and view all the answers

    Rational people make decisions at the margin by

    <p>comparing marginal costs and marginal benefits.</p> Signup and view all the answers

    A marginal change is a

    <p>small, incremental adjustment.</p> Signup and view all the answers

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