Chapter 1 The Nature of Economics

Chapter 1: The Nature of Economics2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth Edition 1Economic analysis is a tool thatAids decision making.helps us understand why people make mistakes.helps us forgive selfish people.complicates decision making.2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: A2Economics can be described as the study of how people use ________ resources to satisfy ________ wants.unlimited; unlimitedunlimited; limitedlimited; unlimitedlimited; limited2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: C3In economics, items that are used to produce goods and services are known aswants.aggregates.factors of need.resources.2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: D4Economics is the study of howpeople make money.preferences are determined.psychology influences preferences..people make choices.2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: D5The way that a society uses or allocates resources to satisfy human wants is calledan economic system.an assumption.realism.a physical science.2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: A6Central planning is a key characteristic of which economic system?Free marketPrice systemCommand and controlMixed economic system2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: C7When the text refers to rational self-interest, it meansYou are looking out for what is best for you as an individual.your focus is on your contribution to society.behavior that makes society better off.behavior that helps your employer earn higher profits.2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: A8Economists assume people behave rationally, which means that peoplenever make a mistake.do not intentionally make decisions that make them worse off.have the necessary information to always make correct decisions.always understand the consequences of their decisions.2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: B9The combination of psychology and economics to determine individual decision making is known asbehavioral economics.pyschomics.the rule of thumb.positive analysis.2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: A10By 2015, no individual in the United States should earn less than $20,000 a year is an example ofa normative statement.a positive statement.an illogical and refutable statement.a truism.2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: A11Which of the following statements is a positive economic statement?The Congress should pass the Presidents tax package.Tax rebates should favor rich people because the pay more in taxes.The Presidents budget included an increase in unemployment insurance payments.none of the above2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: C12Optional Basic Math/graphs practice questions2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionA direct relationship occurs whenthe two variables being compared change in opposite directions, or when one goes up the other goes down.a change in one of the variables causes a change in the other variable in any direction.the two variables being compared change in the same direction, or when one goes up the other also goes up.the two variables have no identifiable relationship with each other.2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: C14A relationship between two variables in which one variable increases at the same time that the other increases is callednonlinear.constant.inverse.direct.2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: D15The paired observation of (14, 6) meansx = 14, y = 6.x = 6, y = 14.x = any multiple of 14, y = any multiple of 6.the origin is at 14 and 6.2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: A16The intersection of the x-axis and the y-axis is called themeeting point.origin.zero point.corresponding point.2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: B17Suppose that on average there are five more car accidents for every extra inch of snowfall in a certain region. If snowfall is graphed on the y axis and car accidents on the x axis, then if we graph this relationship, the slope of the line will be25.5.1/5.1.2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: C18If the slope of a curve is 1/5, we know thatthe relationship is linear, and the line moves from lower left to upper right.the relationship is non-linear, and the line moves from lower left to upper right.the relationship is linear, and the line moves from upper left to lower right.the relationship is non-linear, and the line moves from upper left to lower right.2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: A19Given a linear curve (straight line), the value on the y-axis changes from 100 to 120 when the value on the x-axis changes from 20 to 10, then the slope of that curve is 20.+20. 2.+2.2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: C20If a straight line crosses the Y-axis at 5 and crosses the X-axis at 10, we can conclude that the slope of the line ispositive.negative.zero.infinity.2014 Pearson Education, Inc.Roger LeRoy Miller, Economics Today, Seventeenth EditionAnswer: B21