Chapter 1

When comparing the additional or incremental costs versus additional or incremental benefits of a decision, one is engaging in __.

marginal analysis

When individuals take into account the costs and benefits of their economic decisions, these decisions are considered to be _____.

rational

Which of the following apply to the government's role under laissez-faire capitalism?

Establishing a legal environment, Protecting private property

Which of the following are aspects of the concept of rational consumer behaviour?

The products and the quantities bought must provide the consumer with the highest possible total utility , Consumers think carefully before choosing the goods and services on which to spend their income, Consumers know the wants (needs) that they seek to satisfy, then identify the matching products and decide on the respective quantities that their budget constraints permit

Which of the following are aspects of the concept of rational producer behaviour?

The producer thinks about the production process to reach the maximum output, The producer considers production factors – and the quantities thereof – used as inputs in the process, The producer chooses the production technique and the productive inputs that will yield the highest possible profit in the end 

Which of the following are aspects of the concept of rational self-interest?

Individuals look for and pursue opportunities to increase their utility or level of personal satisfaction, Individuals allocate their resources to maximize their satisfaction, Individuals weigh the costs and benefits of their decisions

Which of the following are central to positive economics?

Measurable or scientific statements about economic behaviour, Statements based on facts and empirical cause-and-effect relationships

Which of the following are determined by a society's economic system? 

How to promote technological progress, Who gets goods that have been produced, What goods are produced, and how they are produced, How to accommodate change

Which of the following are fundamental questions that every market economy must address?

What goods and services will be produced?, How will the system accommodate change?, How will the system promote progress?, How will the goods and services be produced?, Who will get the goods and services?

Which of the following are issues often explored in microeconomics?

Measuring total revenues of a firm or household, Measuring the prices of specific goods, The expenditures of a government entity, A firm's decision to hire more workers

Which of the following economic measures are considered in macroeconomic analysis?

The level of prices in the economy, The unemployment rate, Balance of payments, National income

Which of the following regarding theories of behaviour is accurate?

Such theories are 'rational simplifications'

Which of the following statements are normative?

'The government ought to bail out distressed banks', 'The minimum wage should be increased', 'Supermarkets should lower their prices to compete more strongly', 'I would like the minimum wage to be abolished'

Which of the following statements are positive in an economic sense?

The growth rate in Zimbabwe is higher than that in Zambia., If the government increases the minimum wage, the unemployment rate will rise, As the price of air fares falls, airlines experience a rise in quantity demanded

Which one of the following results from scarcity with respect to economic resources?

The production of limited goods and services

Why do market systems provide such strong incentives for technological advance?

Technological advances spread rapidly because rival firms must follow the lead of the most innovative firm, or suffer immediate losses, Improved production methods which allow firms to lower their product prices, allowing such firms to increase their sales and obtain economic profit at the expense of rivals, An entrepreneur or firm that introduces a popular new product will gain revenue and economic profit at the expense of rivals