Macroeconomics Chapters 1 & 2 Answers – Flashcards
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For economists the word "utility" means
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Pleasure or satisfaction
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A person should consume more of something when its marginal...
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benefit exceeds its marginal cost
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The study of economics is primarily concerned with
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choices that are made in seeking the best use of resources
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Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase. This is a reflection of
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purposeful behavior
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In constructing models, economists
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make simplifying assumptions
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The Latin term "ceteris paribus" means
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other things equal
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The problems of aggregate inflation and unemployment are
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major topics of macroeconomics
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Which of the following is a Microeconomics statement
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The price of personal computers declined last year
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The four factors of production are
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land, labor, capital and entrepreneurial ability
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Command systems are also known as
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communism
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Which of the following is one of the Five fundamental questions?
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What goods and services will be produced
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The competitive market system
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encourages innovation because successful innovators are rewarded with economic profits
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The market system's answer to the fundamental question, "Who will get the goods and services?" is essentially
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"Those willing and able to pay for them"
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The market system's answer to the fundamental question, "how will the system accommodate change?" is essentially
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"Through the guiding function of prices and the incentive function of profits."
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Consumer sovereignty refers to the
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idea that the decisions of producers must ultimately conform to consumer demands
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Economic system is a
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pure market, mixed- command system
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Fundamental questions to be answered
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-What goods and services will be produced? -How will the goods & services be produced? -For whom will the goods and services be produced? -How will the goods and services accommodate change? -How will the system promote success?
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Laissez faire
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Let it be
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Market system
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-Private ownership of all resources -Primarily rely on privately owned firms to produce goods and services -economic activity based on price -income derived from labor, capital, land & entrepreneurial skills. -competition among buyers and sellers
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5 fundamental questions
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1. what will be produced 2.how will it be produced 3.how much will be produced 4.who will receive the output 5.can the system adapt to change?
