_______ is the study of rational choice under conditions of scarcity.
Economics
_______ _____ is the best alternative that you give up when you make
a choice.
Opportunity cost
_______ is an imbalance between what people want and what is freely available.
Scarcity
True or False:
Garbage is scarce.
False.
-Garbage is not scarce, because no one wants it.
People making calculated, self-interested
choices after weighing the costs and
benefits of those choices are making a _______ choice.
rational
True or False:
All choices come with a cost.
True
One must be willing to consider ____ and _______ when making a rational choice.
costs ; benefits
True or False:
Rather than staying in bed and sleeping, you chose to come to your Economics class
instead. The sleep was the opportunity cost of your choice.
True
Economics is not about _____.
money
Any time something is ______ we’ve got to figure out how to use it, how to share it, and how to parcel it out.
scarce
We say that an agent is rational if that agent considers _______ and _______.
cause ; effect
There is no such thing as “____” because there is always an opportunity cost.
free
Economics is called a social science, or a _______ science.
behavioral
In economics, what is the scientific method?
A method that asks questions, produces explanations (models), and forms hypotheses.
True or False:
Economists have integrated only in the field of business.
False.
-They are in the fields of business, government, and academia.
_______ economics is predictive, or descriptive.
Positive
_______ economics is judgmental, or evaluative.
Normative
True or False:
Economists do not need to explore all
possibilities in their efforts to establish
optimal economic conditions.
False.
They do need to explore all possibilities.
_____ ______ , _____ , and ____ _____ are variables that influence consumer spending.
Consumer income ; taxes ; stock market
After creating the _______,
economists must test it in the real
world by collecting data and comparing
it to the model.
hypothesis
True or False:
Economists are employed in every sector of the economy.
True
Positive or Normative?
The bank should not loan any more money to customers.
Normative
Positive or Normative?
The campaign caused an increase in sales.
Positive
If data matches the predictions of a model,
economists have explained a condition
in the ____ _____.
real world.
_________ is the study of the decision-making process of
individuals.
Microeconomics
Macroeconomics is
the study of aggregate decision making.
Nominal variables are
measured in terms of actual dollar values.
____ _______ are measured in terms of physical goods and services.
Real variables
True or False:
In both microeconomics and macroeconomics, there are actors (people making decisions).
True
Net exports are not applicable in ________.
microeconomics.
For households:
Individual purchasing decisions is ___________ and aggregate consumption/savings is _________.
microeconomics ; macroeconomics
$1.50 for coffee cake and $3.00 for coffee equals a total of $4.50.
This is an example of
nominal variables.
The total value of tires and oil are an example of
real variables.
True or False:
It is easier to calculate nominal variables than real variables.
True
_______, on the other hand, pretty much ignores money.
Microeconomics
Microeconomics deals with
relatively small units in the economy.
A _____ _____ is a collection of points on a graph showing the observed relationship between two variables.
scatter diagram
A direct relationship indicates
that the two variables move in the same direction.
A _______ slope indicates a direct relationship between the variables.
positive
A diagram of all observations is a
scatter diagram
True or False:
If you fit a line in the diagram, you can observe the nature of the relationship.
True
Variables A and B are directly related. Therefore, the line connecting A and B is ________ ________.
upward sloping.
True or False:
Economists use graphs to represent only a few of their analysis.
False.
Use for a lot of their analysis.
What kind of relationship is this?
When one variable increases, the other also
increases.
Direct relationship
True or False:
A graph can have no scale (s).
False.
A graph must have a scale (s).
Graphs usually represent relationships between two variables or in some cases relationships among _____variables.
three
Each label on a graph must also be accompanied by a ____.
unit
True or False.
On a graph, even if the units are the same, the scales for the two axes can differ.
True
The algebraic formula for a straight line in a plane is
y = a + b (x)
The formula for the slope of a line is the change in the y-axis variable divided by the change in the x-axis variable, called
rise over run
A _______ _____ is the relationship between the price of a good and the
quantity a consumer wants to buy at each price.
demand curve
A linear relationship is
a relationship between two
variables that is a straight line.
True or False:
The ‘b’ in the formula for a straight line represents quantity.
False.
The ‘b’ represents the slope of the line.
Variables X and Y are inversely related. Therefore, the line connecting X and Y is ________ _________.
downward sloping.
The slope of a line between two points is found by the equation
Slope = Y_2 - Y_1 / X_2 - X_1
The coordinates of point A are (20,20) and the coordinates of point B are (60, 100). The slope of the line between the two points is
The slope = 2.
The mathematical slope of a less-steep line is _____ ____ the slope of a steeper line.
less than
If a line is parallel to the vertical axis, then the slope of the line is
infinite.
If a line is parallel to the horizontal axis, then the slope of the line is
zero.
True or False:
Every straight line can be characterized by its intercept and its slope.
True