chapter 1

Question 1

what is economics?

Answer 1

It’s about how people make choices that max out there satisfaction, given the fact that there wants are unlimited + resources are limited

Question 2

describe the wants of consumers

Answer 2

unlimited

Question 3

Repeated observation lets u create a ___________

Answer 3

hypothesis

Question 4

Positive statement

Answer 4

• statements about “what is”
• Can be tested by checking it against facts

Question 5

Normative statement

Answer 5

• Eg. “i think inflation is too high”
• Expresses opinion + cannot be tested
• statements about “what should be”

Question 6

In a world characterized by scarcity ( people have to choose between different options)

Answer 6

people must make choices among alternatives.

Question 7

The inescapable economic fact is that

Answer 7

there are unlimited wants and limited resources.

Question 8

During the next hour John can choose one of the following three activities: playing basketball, watching television, or reading a book. The opportunity cost of reading a book

Answer 8

is the value of playing basketball if John prefers that to watching television.

Question 9

Chanel has the option of purchasing one of three products: Brand A, Brand B, or Brand C. The price of each product is $10. If Chanel decides to purchase Brand A, the opportunity cost of this decision is

Answer 9

Brand B or Brand C, depending on which she considers to be the highest-valued alternative forgone.

Question 10

If Gordon’s decision to attend Western University is a rational choice, then

Answer 10

for Gordon, attending Western University achieved the greatest benefit over cost.

Question 11

When Costco opened a gas bar just off Highway 401, the neighbourhood was swamped with cars as drivers lined up to get a discount of 10 cents a litre.

The opportunity cost of a litre of gas includes

Answer 11

the time that you would have spent doing something other than lining up to buy a litre of gasoline.

Question 12

When Costco opened a gas bar just off Highway 401, the neighbourhood was swamped with cars as drivers lined up to get a discount of 10 cents a litre.

To control the crowd Costco hires traffic police. When Costco hires traffic police, it faces a tradeoff that could include all of the following except

Answer 12

taking business away from gas stations in the area.

Question 13

Statements about “what should be” are called

Answer 13

normative statements.

Question 14

Statements about “what is” are called

Answer 14

positive statements.

Question 15

“The rich should face higher income tax rates than the poor.” This is an example of

Answer 15

a normative statement.

Question 16

The relationship between two variables that are positively related is shown graphically by a line that

Answer 16

slopes upward to the right.

Question 17

The relationship between two variables that are negatively related is shown graphically by a line that

Answer 17

slopes downward to the right, b/c if the two variables are negatively related then if one of the variables inc the other dec

Question 18

why do consumers need to make choices

Answer 18

bc they cant get everything they want

Question 19

limited resouces of conusmers

Answer 19

income and time

Question 20

Describe the relationship between scarcity, choices, and opportunity cost.

Answer 20

Scarcity leads to choices, and every choice made incurs an opportunity cost.

Question 21

oppurtunity cost in descion making

Answer 21

every choice comes with an opportunity cost in decision-making, which means if your doing one thing your losing out on doing something else

Question 22

give example of oppurtuniy cost

Answer 22

if u go to a lecture, it means ur not at home sleeping, that would be the opportunity cost of attending a lecture

Question 23

a choice is a ___

Answer 23

tradeoff

Question 24

cost is what u must …

Answer 24

give up to get seomthing

Question 25

choices respond to _______

Answer 25

incentives

Question 26

whats ur oppurtuniy cost of being in school

Answer 26

the two parts to the oppurtunity cost

1. you have to pay for tution/res/books… and school consumes a lot of your time
2. but by being in school you could get a great job after which means you could earn that money back ( and maybe even more)

Question 27

Decisions are made by comparing marginal benefit and marginal cost. explain

Answer 27

If the marginal benefit of studying an extra night exceeds its cost, you study

If the cost outweighs the benefit, you don’t study the extra night.

Question 28

whats marginal benefit? provide exmaple

Answer 28

• advantage gained from increasing an activity
• studying an extra night before a test, which boosts your grade.

-Marginal benefit does not include the grade you already achieve without the extra effort.

Question 29

“Our planet is warming because of the amount of coal that we’re burning”

is an example of

Answer 29

postive statement, becuase it can be verified and its a fact that is true - idk?

Question 30

normative vs postive statements

Answer 30

postive- what is + can be proven with eviendece

normative- what shiudl be + cant be proven with evidence

Question 31

People make rational choices by comparing benefit and costs

Answer 31

true