ch 1 MicroEcon

29 cards·by amcloopy

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Scarcity exists when there is less than an infinite amount of a resource or good

false, the limited nature of society's resources

approximately 75 percent of the worlds economies experience scarcity

false

economics is the study of how society manages its scarce resources

true

in most societies, resources are allocated by a single central planner

false

economists use the phrase, "there is no such thing as free lunch" to illustrate how inflation increases prices

false, tradeoffs

henry decides to spend two hours playing golf rather than at his job which pays $8 an hour.Henrys tradeoff is nothing.

false, "earning if working"

Efficiency refers to the size of the economic pie, equity refers to how the pie is divided

true

When gov't policies such as the welfare system try to help the most needy members of society, it increases the productivity of the needy

false, decreases

When the gov't redistributes income from the rich to the poor, people work less and produce fewer goods and services

true

In economics, the cost of something is the dollar amount of obtaining it.

false, what you give up to get it

The opportunity cost of going to college is the value of the best opportunity a student gives up to attend

true

For most students, the largest single cost of a college education is the wages given up to attend school

true

Mallory spends 3 hrs working overtime rather w/ her friends. Earns $8/hr. Her opportunity cost of working isthe $24 she earns working

false, the time not spent with her friends

Russell spends 1hr studying instead of tennis. Opportunity cost to him is the enjoyment and exercise of tennis.

true

People make decisions at the margin by following tradition

false, incremental changes

After much consideration, you have chosen Cancun over Ft. Lauderdale. Change? Marginial benefit of cancun must increase

false, decrease

Rational decision maker takes an action only if the marginal benefit is less than the marginal cost

false, more than

Jo has been offered a corporate job w/ 30% ^ pay. He'll take it. The marginial cost of leaving was greater than the marginal benefit

false, less than

Prices direct economic activity in the market economy by reducing scarcirt of the goods andservices provided

false

An example of market power is a fast food restaurant in a college town.

false

An example of a firm w/ market power is a cable tv provider in St. Louis

true

The "invisible hand" directs economic activity through advertising

false

The Wealth of Nations and the Declaration of Independence share the POV that individuals are best left to their own devices w/o the gov't

true

A primary function of prices in a market economy is to provide participants with spending limits

false

Causes of market failure include externalities & market power

true

An externitality is the ipact of a persons actions of that persons well-being

false, on a bystanders well-being

An example of an externitality is the impact of pollution from a factory in the health of people in the vicinity of that factory

true

The income of a typical worker in a country is most closely linked with productivity

true

If the govt wanted to enact a policy to increase living standers it might allow corporate tax write-offs for money spent on workers safety

false