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microeco test1
colander chapters 1,2,3
| Question | Answer |
|---|---|
| Economics is the study of: | how human beings coordinate their wants and desires given a society's decision-making mechanisms, social customs, and political realities |
| The three central coordination problems of the economy are: | what, how, and for whom |
| Economic reasoning is | based on the premise that everything has a cost |
| The extra cost associated with undertaking some action is its | marginal cost |
| The opportunity cost of undertaking an activity is best defined as | the benefit forgone by not undertaking the next-best activity |
| Microeconomics is | the study of individual choice and how that choice is influenced by economic forces |
| Shawna downloads MP3s. Her favorite source for such music charges $10 per year. After paying that fee, Shawna can download MP3s for forty cents per song. If she follows economic reasoning, she will continue downloading until her per-song marginal benefits | fall below $0.40 |
| Whatever you would be doing if you weren't studying economics right now represents | the opportunity cost of studying economics |
| Economic reasoning says you should continue doing something as long as | marginal benefits are greater than marginal costs. |
| The invisible hand refers to | the price mechanism |
| Comparative advantage arises because: | not all resources are equally effective in the production of all goods |
| When you produce wheat, it is initially relatively inexpensive to produce it, but then per unit costs tend to increase as more is produced. This is an example of | increasing marginal opportunity costs |
| Points inside the production possibilities curve are | attainable and inefficient |
| An increase in productive resources available for use in an economy will | shift the production possibilities curve outward |
| The phenomenon of outsourcing is the result of the force of which law | Law of one price. |
| When resources are better suited for some productive uses than for others, the PPC is | bowed-outward |
| Which of the following reflects the principle of increasing marginal opportunity cost? | Two more hours studying per week could raise your grade from a C to a B, but to raise it from a B to an A, would require 7 hours more studying per week |
| When trade is voluntary | both the buyer and the seller benefit |
| Economists argue that the key benefit of countries engaging in trade based on comparative advantage, is that it | allows both counties to consume beyond their individual PPCs because each of the traded goods is produced in the country with the lowest opportunity cost |
| If all of society's resources are fully and efficiently employed, then it must be producing | at some point on the PPC |
| Market economies require private property rights because without these rights | market incentives to produce would be inadequate |
| The market where households supply factors of production to businesses and are paid by businesses for doing so is the | factor market |
| In light of the default option bias | the government may be able to guide people to make better choices |
| An externality is defined as | the effect of a decision on a third party that is ignored by the decision maker |
| In market-oriented economies like the United States, the actual decisions of what to produce, how to produce it, and for whom to produce it, are predominately made by | businesses |
| The principle of consumer sovereignty | says that, ultimately, consumers' preferences shape what is produced |
| Which of the following is a reason real-world international trade can be difficult | international trade requires complex rules and laws which are usually enforced by the government, but there is no central world government |
| The reasons economists give for government intervention in the market can be summed up by the phrase | "market failures." |
Created by:
eowyn11