Midterm Review from Quizzes Flashcards
Trade-offs force society to make choices, particularly when answering the three fundamental questions:
What goods and services will be produced? How will they be produced? Who will receive the produced goods and services?
Economics is a social science because…
It is based on studying the actions of individuals, it concerns human behavior (particularly decision making behavior), it applies the scientific method to the study of the interactions among individuals
When he federal government crafts environmental policies that make it less expensive for firms to follow green initiatives…
The policies are consistent with economic incentives
Microsoft charges $599 for Windows 7. Is this pricing decision rational?
When we assume the managers at microsoft have used all available information and have weight all known benefits and costs, we are assuming rationally
Microeconomics is the study of…
How households and firms make choices, how they interact with markets, and how the government attempts to influence their choices
Reasons for drawing incorrect conclusions about cause and effect include…
Reverse causality and an omitted variable
Equity is…
The fair distribution of economic benefits
A production possibilites frontier is…
A curve showing the maximum attainable combination of two products that may be produced with available resources and current technology
Two key groups participate in markets. A ____ consists of individuals in a home. ____ are suppliers of goods and services.
Household, firms
We can use a simple economic model called the ____ to see how participants in markets are linked.
Circular flow diagram
A free market exists when…
The government places few restrictions on how a good or service an be produced or sold or on how a factor of production can be employed
