Microeconomics Chapter 1 Homework

When the federal government crafts environmental policies that make it less expensive for firms to follow green​ initiatives,

A. the policies are consistent with economic incentives.
B. the policies are futile because where the environment is​ concerned, it has been repeatedly shown that firms do not respond to economic incentives.
C. the policies are likely to be more successful than policies that cost firms​ more, but they do not recognize economic incentives.
D. pollution is likely to increase.

___________ is the study of the choices people make to attain their​ goals, given their scarce resources.

Economists use the word marginal to mean an extra or additional benefit or cost of a decision. An optimal decision occurs when

A. marginal benefit equals marginal cost.
B. marginal cost is zero.
C. marginal benefit is maximized.
D. marginal benefit is greater than marginal cost

A market is a group of
___________ and ___________
of a good or service and the institution or arrangement by which they come together to trade.

Microsoft charges a price of​ $599 for a copy of Windows 7. Is this pricing decision​ rational?

A. Microsoft's choice was​ rational: the price will maximize profit.
B. When we assume the managers at Microsoft have used all available information and have weighed all known benefits and​ costs, we are assuming rationality.
C. ​Microsoft's choice cannot be​ rational: the price is clearly more than most people are willing and able to pay.
D. We cannot assume that this pricing decision was rational because we do not have enough information to make an assumption

One of the basic facts of life is that people must make choices as they try to attain their goals. This unavoidable fact comes from a reality an economist calls

A. economics.
B. the market.
C. scarcity.
D. rationality.

Societies organize their economies in two main ways to answer the three questions of​ what, how, and who. A society can have a
___________ ___________ economy in which the government decides how economic resources will be allocated. Or a society can have a _________ economy in which the decisions of households and firms interacting in markets allocate economic resources.

_____________ ______________ occurs when a good or service is produced at the lowest possible cost.
____________ ______________ occurs when production is in accordance with consumer preferences

Equity is

A. when poorer​ people's income is growing more rapidly than more wealthy​ people's income.
B. an exactly equal distribution of income.
C. always achieved by the market.
D. the fair distribution of economic benefits.

A __________ economy is an economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources.

Opportunity cost is

A. the idea that because of​ scarcity, producing more of one good or service means producing less of another good or service.
B. when unlimited wants exceed the limited resources available to fulfill those wants.
C. the highest valued alternative that must be give up to engage in an activity.
D. when consumers and firms use all available information as they act to achieve their goals.

Trade-offs force society to make​ choices, particularly when answering the following three fundamental​ questions:

A. ​One, what goods and services will be​ produced? Two, how will the goods and services be​ produced? Three, who will receive the goods and services​ produced?
B. One, what goods and services will be produced in foreign​ countries? Two, who will produce the goods and​ services? Three, who will receive the goods and services​ produced?
C. One, what goods and services will be​ produced? Two, how will the goods and services be​ produced? Three, is the distribution of goods and services​ fair?
D. ​One, what goods and services will be produced​ domestically? Two, how will the goods and services be​ produced? Three, is the distribution of goods and services​ fair?

_____________, _____________, and _____________
​decide(s) what goods and services will be produced

In the United​ States, who receives the goods and services produced depends largely on

A hypothesis in an economic model is

A. tested before it can be accepted​ (or not​ rejected).
B. a statement that may be either correct or incorrect about an economic variable.
C. usually about a causal relationship.
D. all of the above.

___________ analysis is concerned with what is​, and ___________ analysis is concerned with what ought to be. Economics is about ___________ analysis​, which measures the costs and benefits of different courses of action.

Economics is a social science because

A. it is based on studying the actions of individuals.
B. it applies the scientific method to the study of the interactions among individuals.
C. it considers human behavior—particularly ​decision-making behavior.
D. all of the above.

Microeconomics is the study of

A. firms as individual units excluding how these firms interact with one another.
B. how households and firms make​ choices, how they interact in​ markets, and how the government attempts to influence their choices.
C. ​"small" (less than​ $100,000) economic transactions in the economy.
D. the economy as a​ whole, including topics such as​ inflation, unemployment, and economic growth.

A firm operating in a market economy has a strong incentive to be productively efficient and allocatively efficient because the former enables it to
____________ ____________ __________ while the latter ensures it of
____________ ____________.
If a firm is productively and allocatively​ efficient, it earns
a ____________​; if it is​ not, it
________________________.

Firms choose how to produce the goods and services they sell. In many​ cases, firms face a​ trade-off between using more workers or using more machines. For​ example,

A. many times in the past several​ decades, firms may have chosen between a production method in the United States that uses fewer machines and more workers and a production method in China that uses more machines and fewer workers.
B. many times in the past several​ decades, firms may have chosen between a production method in the United States that uses fewer workers and more machines and a production method in China that uses more workers and fewer machines
C. a local service station has to choose whether to provide car repair services using more diagnostic computers to support their auto mechanics and fewer tools to support their auto mechanics or more tools to support their auto mechanics and fewer diagnostic computers to support their auto mechanics
D. movie studios have to choose whether to produce animated films using more highly skilled animators to draw them by hand or fewer highly skilled animators and more​ low-skill animators