Chapter 1

Question 1

What is the difference between a microeconomist and a macroeconomist

Answer 1

A macroeconomists looks at the big picture in relation to more global economics vs. microeconomist have a narrower more specific economical issues.

Question 2

An economist at the University of Alaska at anchorage has been asked to explain the price of Alaskan crude oil has fallen recently. in order to develop a model, the professor should take which steps:
ID the problem
Gather data on oil prices and unrelated variables for correlations
ask people why they are not purchasing
none of the above

Answer 2

ID the problem, develop a model based on simplifying assumptions and test the model to formulate a conclusion

Question 3

Which of the following is a microeconomists topic: 
price of a new home
inflation rate
economic growth rate 
unemployment rate
forecasts of a recession next year

Answer 3

price of a new home

Question 4

A factor of production is the same as …

Answer 4

a resource

Question 5

“the government should provide healthcare for all citizens…” is a statement of …?

Answer 5

normative economic analysis

Question 6

Which of the following is not an example of a factor of production? a forest, computer program, a labor leader, dollars

Answer 6

Dollars

Question 7

Which of the following is not a resource? land, labor, money, or capital

Answer 7

money

Question 8

a good economic model should capture as many details about real-world behavior as possible true or false

Answer 8

false

Question 9

The statement, “American workers are lazy” is an ecamle of positive economic analysis T or F

Answer 9

False

Question 10

Which of the following is the best example of an activity that would be undertaken by and entrepreneur: buying and selling stocks and bonds
starting a new business, working on an assembly line, running for political office

Answer 10

starting a new business

Question 11

people are forced to make choices because of….

Answer 11

unlimited wants and limited resources

Question 12

Economics according to its definition studies how people:

Answer 12

make choices in the face of scarcity

Question 13

Scarcity

Answer 13

Scarcity is the condition in which human wants are forever greater than the available supply of time, goods, and resources

Question 14

Resources

Answer 14

the basic categories of inputs used to produce goods and services. resources are also called factors of production

Question 15

3 categories of resources

Answer 15

land, labor, capital

Question 16

what organizes resources to produce goods and services

Answer 16

entrepreneurship organizes _______________to produce goods and services

Question 17

land

Answer 17

any natural resource provided by nature

Question 18

labor

Answer 18

the mental and physical capacity of workers to produce goods and services

Question 19

entrepreneurship def

Answer 19

the creative ability of individuals to seek profits by taking risks and combining resources to produce innovative products.

Question 20

capital

Answer 20

the physical plants, machinery, and equipment used to produce other goods, capital goods are human-made goods that do not directly satisfy human wants.

Question 21

financial capital

Answer 21

paper assets such as stocks, bonds, deeds, by itself not productive, instead it is only a paper claim on economic capital

Question 22

define scarcity

Answer 22

the condition in which human wants are forever greater than the available supply of time, goods, and resources

Question 23

Define resources

Answer 23

the basic categories of inputs used to produce goods and services, resources are also called factors of production economists divide resources into three categories, land, labor, and capital

Question 24

define economics

Answer 24

the study of how society chooses to allocate its scarce resources to the production of goods and services in order to satisfy unlimited wants

Question 25

what are the steps to developing a model

Answer 25

identify the problem, develop a model based on simplified assumptions, collect data, test the model and formulate conclusions

Question 26

define model

Answer 26

a simplified description of reality used to understand and predict the relationship between variables

Question 27

what are the 2 most common pitfalls to clear thinking

Answer 27

failing to understand the ceteris paribus assumption and confusing association and causation

Question 28

define ceterus paribus

Answer 28

a latin phrase that means while certain variables change all other things remain unchanged

Question 29

T or F a theory cannot be tested legitimately unless its ceteris paribus assumption is satisfied

Answer 29

True

Question 30

what is the difference between association and causation

Answer 30

association is correlation and causation causes the effect

Question 31

the fact that one event follows another does not necessarily mean that the firs event caused the second event T or F

Answer 31

True

Question 32

define positive economics

Answer 32

an analysis limited to states that are verifiable “if A then B”

Question 33

define normative economics

Answer 33

an analysis based on value judgment

Question 34

T or F when opinion or points of view are not based on facts they are scientifically untestable

Answer 34

T