In economics, the pleasure, happiness, or satisfaction received from a product is called:
o :# Utility
Joe sold gold coins for $1000 that he bought a year ago for $1000. He says, "At least I
didn't lose any money on my financial investment." His economist friend points out that
in effect he d...
Econ 248 Final Review Questions and
Answers
In economics, the pleasure, happiness, or satisfaction received from a product is called:
o :# Utility
Joe sold gold coins for $1000 that he bought a year ago for $1000. He says, "At least I
didn't lose any money on my financial investment." His economist friend points out that
in effect he did lose money, because he could have received a 3 percent return on the
$1000 if he had bought a bank certificate of deposit instead of the coins. The economist's
analysis in this case incorporates the idea of:
o :# Opportunity costs
A person should consume more of something when its marginal:
o :# Benefits exceeds its marginal costs
Economics may best be defined as the:
o :# the social science concerned with how individuals, institutions, and society
make optimal choices under conditions of scarcity
The economic perspective entails:
o :# a comparison of marginal benefits and marginal costs in decision making
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The assertion that "there is no free lunch" means that:
o :# all production involves the use of scarce resources and thus the sacrifice of
alternative goods
The process by which economists test hypotheses against facts to develop theories,
principles, and models is called:
o :# the scientific method
Ben says that "An increase in the tax on beer will raise its price." Holly argues that
"Taxes should be increased on beer because college students drink too much." We can
conclude that:
o :# Holly's statement is normative, but Ben's is positive
The economizing problem is:
o :# the need to make choices because economic wants exceed economic means
The budget line shows:
o :# all possible combinations of two goods that can be purchased, given money
income and the prices of the goods.
An economic system:
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