Exam Two Flashcards
An advantage of free markets is that basic human needs will always be met. (T/F)
False
An analysis which does not take the passage of time into account is called…
static
Empirical investigation is analysis based on…
the recording of specific phenomena
The common term for a side effect of a market transaction that affects those not involved in the transaction is…
an externality
The common term for someone who enjoys a benefit of a public good without paying for it is…
a free rider
The two main economic actors in the basic neoclassical model are…
households and firms
The value of the next best alternative that is foregone when a choice is made is called…
opportunity cost
When the price of a good rises, the quantity demand tends to decrease. This is an example of what type of relationship?
inverse
Which one of the following is an example of an externality?
Someone suffers from automobile pollution even though they do not drive
Private property is generally considered an institutional requirement for markets to operate efficiently. (T/F)
True
Production points along a production possibilities frontier are considered efficient. (T/F)
True
Scarcity means that resources are not sufficient to allow all goals to be accomplished at once. (T/F)
True
The basic neoclassical model assumes that firms maximize profits and households maximize utility. (T/F)
True
The ceteris paribus assumption means to hold all other factors constant. (T/F)
True
The existence of market power helps free markets achieve efficient outcomes. (T/F)
False
