Exam 1: Economics: Foundations and Models

Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________,meaning they make the best decisions given their knowledge of the costs and benefits.

Define productive efficiency.Does productive efficiency imply allocative efficiency? Explain.

Which of the following statements is correct?

Which of the following is a normative economic statement?

The decisions Apple makes in determining production levels for its iPhone is an example of a microeconomic topic.

Voluntary exchange between buyers and sellers generates ________ in a market economy.

Which of the following is a normative economic statement?

In economics,the term "equity" means

How does the study of microeconomics differ from that of macroeconomics? Give one example each of an issue studied in microeconomics and in macroeconomics.

Which of the following are positive economic statements and which are normative economic statements? a.An increase in the minimum wage causes unemployment. b.The government should raise the minimum wage above $7.25 per hour. c.The prolonged recession has caused the unemployment rate to reach a 30-year high. d.Interest rates need to be lower for the economy to emerge from the recession. e.Inflation has decreased since the onset of the recession. f.Once the recession has ended,interest rates should increase to assure that inflation does not go up.

"A decrease in the price of digital cameras will decrease the demand for camera film." This statement is an example of a positive economic statement.

Mr.Peabody chooses to invest in companies that produce goods and services at the lowest possible cost.Mr.Peabody is investing in companies that are

Macroeconomics is the study of

When every good or service is produced up to the point where the last unit provides ________,allocative efficiency occurs.

Scarcity refers to the situation in which

The Farm Factory,a booth at the local Farmer's Market,sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon.What is the opportunity cost of buying a dozen eggs?

The Farm Factory,a booth at the local Farmer's Market,sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon.What is the opportunity cost of buying a gallon of milk?

Policies based on positive economic ideas tend to decrease economic efficiency and reduce equity.

All of the following questions or statements regarding tariffs are positive except

Which of the following is an example of an activity undertaken by an entrepreneur?