Chapter 1

Marginal analysis involves the comparison or evaluation of __.

the incremental cost versus the incremental benefit of a decision

Market systems are dynamic because _____ preferences, _____ and _____ of resources all change.

consumer, technology, supplies

Merits of the market system include __.

freedom, efficiency, incentives

Normative economics is concerned with __.

expressions of support for particular policies, value judgements about desirable goals or policies

One of the main differences between emerging and developed markets lies in the fact that __.

developed nations export industrialized goods, while emerging markets are moving away from primary production

Optimal consumer behaviour consists of three elements, namely _____, _____ and _____.

calculation, negotiation, expenditure

Optimal producer behaviour consists of three elements, namely _____, _____ and _____.

calculation, negotiation, expenditure

Over the course of the last few years, frozen yoghurt outlet chain Wakaberry has been closing its chains as consumers spend more at Milky Lane, and profits decline. This phenomenon shows the working of __.

rand votes, consumer sovereignty

Positive economics avoids the use of _____ judgements.

value

Positive economics is concerned with __; normative economics deals with __.

what is; what should be

Private property rights are important because__.

when coupled with the freedom to negotiate contracts, they allow individuals and businesses to use resources as they see fit

Recently, you decided to super-size your chips at a fast food restaurant. On the one hand, your decision considered the additional costs associated with the super-size, including the additional monetary, caloric and cholesterol intake, as well as the extra time you had to wait for those fries because a new batch was being cooked.

Marginal analysis

Resources flow from _____ to _____ through the resource market, and products flow from _____ to _____ through the product market.

households, businesses, firms, households

Resources for which the quantity desired exceeds the quantity available are deemed to be __.

scarce

Suppose a business continuously earns enough from its sale of goods and services to more than cover its various input costs, including opportunity costs. This business is said to __.

make a profit

Technology and capital goods progress differently in laissez-faire and command systems because__.

in command systems, government decides which technologies and capital to use. In laissez-faire systems however, there is a constant drive for innovation and accumulation

The discipline that examines either the economy as a whole or in the aggregate is known as _____.

macroeconomics

The discipline that studies the decision-making process of workers, households, firms and government on an individual basis, rather than as aggregates is known as __.

microeconomics

The economic assumption that human behaviour reflects rational self-interest is based on the notion that individuals__.

weigh the costs and benefits of their decisions to maximize their utility

The economic decisions of different individuals are considered to be rational when these individuals

compare benefits and costs.