Exam 1: Economics: Foundations and Models

When voluntary exchange takes place,both parties gain from the exchange.

In a centrally planned economy,the households and firms decide how economic resources will be allocated.

An example of a microeconomics question is:

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

Economists assume that rational behaviour is useful in explaining choices people make________.

Soo Jin shares a one-bedroom apartment with her classmate.Her share of the rent is $700 per month.She is considering moving to a studio apartment which she will not have to share with anyone.The studio apartment rents for $950 per month.Recently,you ran into Soo Jin on campus and she tells you that she has moved into the studio apartment.Soo Jin is as rational as any other person.As an economics major,you rightly conclude that________.

Damian shares a small food truck with his sister.His share of the expenses is $500 per month.He has decided to get his own,newer food truck which he will not have to share with anyone.His expenses for the newer truck are $1 400 per month.Damian is as rational as any other person.As an economics major,you rightly conclude that________.

Scarcity is a problem that will eventually disappear as technology advances.

DeShawn's Detailing is a service that details cars at the customers' homes or places of work.DeShawn's cost for a basic detailing package is $40,and he charges $75 for this service.For a total price of $90,DeShawn will also detail the car's engine,a service that adds an additional $20 to the total cost of the package.Should DeShawn continue to offer the engine detailing service?

Which of the following correctly describes the relationship between economic efficiency and economic equity?

The highest valued alternative that must be given up to engage in an activity is the definition of __________.

What occurs when production reflects consumer preferences?

Economic models do all of the following except _________.

In which of the following situations does society not face a trade-off?

'The distribution of income should be determined by the government' is an example of a positive economic statement.

The distribution of income primarily determines which of the fundamental economic questions?

Macroeconomics is the study of________.

Allocative efficiency occurs when every good or service is produced up to the point where the last unit provides________.

What is the difference between positive economic analysis and normative economic analysis? Give one example each of a positive and normative economic issue or question or statement. __________________________________________________________________________________________________________________________________________________________________________________________

What is a mixed economy? __________________________________________________________________________________________________________________________________________________________________________________________