4. Decision making at the margin means a. Focusing only upon how to spend money

Question

4. Decision making at the margin means a. Focusing only upon how to spend money b. Considering the choice between a little more of this and a little less of that c. That alternatives are ignored d. That benefits and costs are ignored Economists understand that people respond to a. Laws b. Incentives 5. Threats more than rewards c. d. Positives, but not negatives When economists say an individual displays economizing behavior, they simply mean that she a. 6. Making a lot of money b. Buying only those products that are cheap and of low quality c. Learning how to run a business more effectively d. Making choices that yield specific benefits at the least cost Reliance upon the market to allocate resources is likely to produce a. 7. Rationing of goods b. Inefficient production methods An efficient variety of goods and services, with some exceptions c. d. Good employment opportunities for central planners Economists use models in order to a. 8. Learn how the economy works b. Make their profession appear more precise Make economics difficult for students Make sure that all of the details of the economy are included in their analysis Factors of production are a. Used to produce goods and services b. Owned by firms c. Abundant in most economies d. c. d. 9. Used by both firms and households

Explanation / Answer

4> b

Decision at the margin involves the marginal cost and marginal benefit.

5> b

Economists always check for incentives for any action.

6> d

It means that the individual is acting rationally.

7> c

Market is almost always gives an optimal allocation.

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