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Mac Econ
| Question | Answer |
|---|---|
| Economist Study | How people make decisions? How people interact? How economy functions as a whole? |
| How ppl make decisions? | trade off, efficiency and equality, opportunity cost, rational beings and margin, marginal benefit and cost, incentives |
| How ppl interact? | trade between countries, market economy, prices, Adam Smith's invisible hand, government and efficiency |
| How economy functions as a whole? | country's standard of living, productivity, business cycle |
| Invisible hand | how the decisions of households and firms lead to desirable market outcomes |
| To say people respond to incentives means that people may alter their decisions when the costs and benefits of an action change. | True |
| Economics is the study of how society manages its | Unlimited wants and limited resources |
| The opportunity cost of an item is | what you give up to get that item |
| Scarcity | limited resources |
| Government policies that improve equality usually increase efficiency at the same time. | False |
| Equality Vs Efficiency | equality refers to the uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources |
| Mina decides to spend three hours working overtime rather than going to the park with her friends. She earns $20 per hour for overtime work. Her opportunity cost of working is | the enjoyment she would have received if she gone to the park |
| She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that | people face trade offs |
| The primary determinant of a country's standard of living is | the country ability to produce goods and services |
| In a market economy, who makes the decisions that guide most economic activity? | firms and households |
| Suppose the state of Wyoming passes a law that increases the tax on cigarettes. As a result, smokers who live in Wyoming start purchasing their cigarettes in surrounding states. Which of the following principles does this best illustrate? Question | People respond to incentives |
| A rational decision maker | takes an action only if the marginal benefit of that action exceeds the marginal cost of that action |
| Which of the following is not an example of a group responding to an incentive? | Universities offer fewer online when they generate more revenue at the same cost than traditional classes |
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cupcake1010