university of michigan

what theories are and what it should take to be confident in them - Answer A theory is any claim (or group of claims) that explains why we observe some of the things we do. what it means for two claims to be probabilistically independent - Answer Two claims A and B are probabilistically independent when P ( A ) = P( A | B ). how the general conjunction & disjunction rules works what the planning fallacy is, and how it relates to conjunction - Answer Conjunction rule: P( A...

The concept of scarcity in economics refers to A. unlimited resources and limited wants. B. limited resources and unlimited wants. C. the fact that resources can sometimes be limited. D. a shortage of food. - Answer B. limited resources and unlimited wants. What is the term for the voluntary exchange of goods and services between two or more parties? A. trade B. trade-offs C. specialization D. opportunity cost - Answer A. trade Incentives can be classified as A. positi...

Economics - Answer The study of how society manages its scarce resources Scarcity - Answer The limited nature of society's resources Efficiency - Answer The property of society getting the most it can from its scarce resources Equality - Answer The property of distributing economic prosperity uniformly among the members of society Opportunity Cost - Answer Whatever must be given up to obtain some item; measures trade-offs Incentive - Answer S...

In a ____________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers. - Answer market-oriented economy In the first chapter of The Wealth of Nations, Smith introduces the idea of the, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers. Group of answer choices - Answer division of labor In the _________, hou...

what affects your decision via the interdependence principle? (4) - Answer your other decisions, (you have limited resources, other constraints) decisions made by others within the market, decisions made by others in other markets, expectations over time What drives all economic forces? - Answer individual decisions Name the four core principles of economics - Answer cost benefit, opportunity cost, marginal, interdependence Buy when costs (<,>,=) benefits - Answe...

profit maximization assumption - Answer we assume that firms attempt to maximize profits profits= - Answer TR-TC P*Q-C(Q) total revenue - Answer the amount of income received from all units sold total cost - Answer the total amount spent producing a given quantity of output marginal cost - Answer the additional cost incurred by producing an additional unit of output MC= - Answer ΔTC/ΔQ MR= - Answer ΔTR/ΔQ marginal revenue - Answ...

Positive Economics - Answer What is Normative Economics - Answer What ought to be 4 Keys of Good Decision-Making - Answer 1) Cost-benefit 2) Opportunity cost 3) Marginal principle 4) Connectedness principle Cost-benefit - Answer evaluate full set of cost and benefits, then pursue benefit that is at least as large as the cost Consumer Surplus - Answer difference between willingness to pay and the price Producer Surplus - Answer difference betw...

comparative advantage - Answer when one producer can produce a good at a lower opportunity cost than another producer -reason for specialization absolute advantage - Answer when one producer can produce more of a good than another producer in a certain period of time Production Possibility Frontier - Answer represents the possible combinations of goods that an economy can produce in a certain period of time specilaization - Answer requires sufficient ability to ...

positive economics vs normative economics - Answer pos = what is norm = what ought to be framing - Answer how diff alternatives are described/framed sunk costs - Answer costs you’ve already incurred, cannot be reversed, ignore these sunk costs individual demand curve - Answer downward sloping law of demand - Answer the Q demanded is higher when prices r lower rational rule for buyers - Answer buy more of an item if its MB is greater than/= to...

market power and what it arises from - Answer extent to which a seller can charge a higher price without losing many sales to competing businesses. comes from the # of competing firms and the level of product differentiation perfect competition - Answer markets in which a) all businesses in the industry sell an identical good and b) there are many buyers and sellers who are all small relative to the market under perfect competition, all sellers have ___ market power, so they ar...