Ch1 Principles and Practices of Economics
True or false - economists might study the choice of whether David wakes up on time each morning
True - economists study all human behavior and choice is the unifying feature of economics
What is the median of this set of data: 1, 2, 3, 6, 8
3 because Median is the Middle number
True or False: Marginal analysis and total value will produce different answers
False! The optimal choice is the same regardless of which analysis tool you use
What is the point where the supply and demand curve meet called?
Equilibrium
Name one of the 3 conditions that must be met to be considered unemployed
1) does not have a job
2) actively looked for a job in the prior 4 weeks
3) is currently available for work
__________ is a calculation that identifies the best option by summing benefits and subtracting costs, using a common unit of measurement
Cost-Benefit Analysis is a calculation that identifies the best option by summing benefits and subtracting costs, using a common unit of measurement
What is the mean of this set of data: 1, 2, 3, 6, 8
4 because the mean is the average
Mean = sum (20) / number of data points (5)
True or false: the first step of both marginal analysis and total value is to translate all costs and benefits into common units
True
Demand curve shifts right
Gross Domestic Product (GDP) is the market value of the _______ goods and services produced in a country during a given period of time
Gross Domestic Product (GDP) is the market value of the FINAL goods and services produced in a country during a given period of time
ANSEP Acceleration students ate a collective 50,000 dino nuggets in the 2025-2026 school year - is this a positive or normative economics statement?
Positive Economics - it is what people actually do
If number of students in ANSEP Acceleration goes up while the number of dino nuggets consumed also goes up - it could be said that these two variables have a _______ correlation
Positive correlation
____________ is the extra cost generated by moving from one feasible alternative to the next feasible alternative
Marginal Cost is the extra cost generated by moving from one feasible alternative to the next feasible alternative
In the dino nugget market, the cost of bread crumbs goes up. What happens to the supply and/or demand curves?
Supply curve shifts left
What is the equation for determining unemployment rate?
Currently unemployed individuals
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Labor force (individuals eligible to be employed)
Describe the principle of Equilibrium
A situation in which everyone is simultaneously optimizing, so nobody believes they would benefit personally by changing their own behavior, given the choices of others
Students with high self-esteem get better grades. You might think feeling good about yourself drives success. The reverse is that getting good grades is what builds a student's self-esteem
This is an example of ___________
Reverse causality
Determine the marginal benefit associated with studying for the following number of hours
Hour --- Exam Score
1 --- 75%
2 --- 82
3 --- 85
4 --- 90
1 --- 75%
2 --- 7%
3 --- 3%
4 --- 5%
In the Anchorage dino nugget market, two new stores open that sell dino nuggets. What happens to equilibrium price?
What is the value contributed to GDP of a car that uses $500 of steel, $200 of leather, and $100 of plastic - and sells for the price of $20,000?
$20,000 is contributed towards GDP. It is the FINAL price
What are the 3 principles of Economics?
Optimization, Equilibrium, and Empiricism
Scientists use the scientific method to do two things:
Hint: both of them are related to 'models'
1) Develop models of the world
2) Evaluate those models by testing them with data
Is optimization analysis (total value or marginal analysis) an example of positive economics, normative economics, or both?
Both. It takes objective data like how much an apartment costs, how much you value your time, etc (positive economics) and then recommends the optimal choice based on the information provided (normative economics)
Describe diminishing marginal benefit
As you consume more of a good, your willingness to pay for an additional unit declines. AKA you value additional units less as you have more of them