Micro Economics Chapters 1-4 – Flashcards
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Q1:Efficiency means that
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society is getting the maximum benefits from its scarce resources.
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Q1:Economists use the word equity to describe a situation in which
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the benefits of society's resources are distributed fairly among society's members
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Q1:What you give up to obtain an item is called your
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opportunity cost
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Q1:The opportunity cost of going to college is
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the value of the best opportunity a student gives up to attend college
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Q1:A marginal change is a
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small, incremental adjustments
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Q1:A rational decision maker takes an action only if the
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marginal benefit is greater than the marginal cost
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Q1:The term used to describe a situation in which markets fail to allocate resources efficiency is called
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market failure
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Q1:An example of an externality is the impact of
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pollution from a factory on the health of people in the vicinity of the factory
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Q1:Which of the following firms is mostly likely to have market power
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the last gas station in New Mexico for 100 miles
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Q1:The term "Productivity"
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refers to the quantity of goods and services produced from each hour of a worker's time
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Q2:The circular-flow diagram is a
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visual model of how the economy is organized
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Q2:Factors of production are
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inputs into the production process
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Q2:In a circular flow diagram,
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income payments flow from firms to households, and sales revenue flows from households to firms
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Q2:Which of the following items is not a factor of production
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money
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Q2:Refer to the figure above, Production is efficient if the economy is producing (pictures on phone)
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30 barrels and 6 bathtubs
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Q2: Refer to the figure above. What is the opportunity cost of moving from point A to point B? (picture on phone)
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20 barrels
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Q2: Refer to the figure above, If this economy puts all of its resources into the production of bathtubs it could produce. (picture on phone)
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no barrels and 16 bathtubs
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Q2: The slope of a straight line is calculated by
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rise divided by run
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Q2:A demand curve shows the relationship
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between price and quantity demanded
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Q2: Macroeconomics is the study of
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economy-eide phenomena
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Q3: When an economists points out that you and millions of other people are interdependent, he or she is referring to the fact that we all
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rely upon one another for the goods and services we all consume
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Q3:If Shawn can produce more donuts in one day than sue can produce in one day, then
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Shawn has a comparative advantage in the production of donuts
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Q3: Specialization and trade are closely linked to
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comparative advantage
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Q3: The producer that requires a smaller amount of inputs to produce a certain amount of a good,relative to the quantities of of inputs required by other producers to produce the same amount of that good,
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has an absolute advantage in the production of that good
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Q3: imports are
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goods produced abroad and sold domestically
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Q3: exports are
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goods produced domestically and sold abroad
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Q3: Suppose that the country of XENO chose to be isolate itself from the rest of the world. Its ruler proclaimed that XENO should become self sufficient, so it would not engage in foreign trade. From an economic perspective, this idea would,
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not make sense as long as XENO had a comparative advantage in some good
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Q3: Suppose the US has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that
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the US should produce more pork than what is required and export some of it to Mexico
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Q3:Trade can make everybody better off because it
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allows people to specialize according to comparative advantage
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Q3: Trade between countries
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must benefit both countries equally: otherwise trade is not mutually beneficial
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Q4: If Francis experiences a decrease in his income, we would expect that, as a result, Francis's demand for
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normal goods will decrease
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Q4: You love peanut butter. You hear on the news that 50 percent of the crop in the South has been wiped out by drought, and that this will cause the price of peanuts to double by the end of the year. As a result,
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your demand for peanut butter decrease as you look for a substitute good
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Q4: Ford Motor Company announces that it will offer $3,000 rebates on new Mustangs starting next month. As a result of this information, today's demand curve for Mustangs
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will not shift, rather, the demand curve for mustangs will shift to the right next month
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Q4: According to the law of demand
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price and quantity demanded are negatively related
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Q4: The negative relationship between price and quantity demanded
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is referred to as the law of demand
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Q4: An increase in demand is represented by
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a rightward shift of a demand curve
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Q4: The relationship between price and quantity supplied is
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negative
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Q4: A market supply curve is determined by
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horizontally summing individuals supply curve
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Q4: A technological advance will shift the
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supply curve to the right
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Q4: A leftward shift of a supply curve is called
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a decrease in supply
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T1: The word economy comes form the Greek word for
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one who manages a household
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T1: Economics deals primarily with the concept of
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scarcity
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T1: A good is considered scarce in a society when
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everyone in that society cannot have all they want of the of the good
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T1: Economics is the study for
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how societies manages its scarce resources
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T1: Economists use the phrase "There is no such thing as a free lunch, " to illustrate
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that to get one thing, we must give up something else
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T1: Henry decides to spend two hours playing golf rather than working at his job which pays $8 per hour. Henry's tradeoff is
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the $16 he could have earned working for two hours
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T1: Efficiency means that
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society is getting the most it can from its scarce resources
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T1: Economists use the word equity to describe a situation in which
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the benefits of societies resources are distributed fairly among societies members
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T1: What you give up to obtain an item is called your
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opportunity cost
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T1: People make decisions at the margin by
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comparing cost and benefits
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T1: best example of marginal cost
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Morgan gets a raise at her part-time job and is now paid $7.25 per hour instead of $7.00
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T1: A rational decision maker takes an action only if the
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marginal benefit is greater than the marginal cost
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T1: If shawn can produce donuts at a lower opportunity cosy than sue then,
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shawn has a comparative advantage in the production of donuts
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T1: Comparative advantage is based on
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opportunity cost
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T1: The country that has a comparative advantage in a product
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should export that product
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T1: The producer that requires a smaller quantity of inputs to produce a good
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has an absolute advantage in the production of that good
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T1: The opportunity cosy of an item is
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what you give up to get that item
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T1: Total output in an economy increases when each person specializes because
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each person spends more time producing that product for which they have advantage
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T1: imports are
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goods produced abroad and sold domestically
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T1: exports are
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goods produced domestically and sold abroad
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T1: According to Adam Smith, a person should never attempt to make at home
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what it will cost him more than to buy
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T1:The gains from trade are
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a result of more efficient resource allocation
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T1: The forces that make market economics work are
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demand and supple
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T1:One result of a drought in the midwest could be an increase in
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the price of frosted shredded wheat
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T1: what is true
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buyers determine demand and sellers determine supply
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T1: For each good produced in a market economy, demand and supply determine
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both price and quantity
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T1: Who is that ultimately determines the demand for a product or service?
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those who buy the product or service
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T1: A competitive market is one in which
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there are so many buyers and many sellers that each has a negligible impact on price
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T1: In a competitive market,
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each seller has limited control over the price of his product
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T1: For a competitive market, which is true
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if a seller charges more than the going price, buyers will go elsewhere
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T1: Buyers and seller who have no influence on market price are referred to as
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price takers
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T1: What is not a determining factor of demand
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technology
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T1: The amount of the good buyers are willing and able to purchase is the
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quantity demanded
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T1: If a good is "normal" then an increase will result in
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an increase in the demand for the good
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T1: If Francis receives a decrease in his pay, we would expect
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Francis's demand for inferior goods to increase
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T1: Suppose that a decrease in the price of X results in less of good Y sold. This would mean that X and Y are
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substitute goods
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T1: Two goods are substitute if a decrease in the price of one good
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reduces the demand for the other good
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T1: Two goods are complements if a decrease in the price of one good
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raises the demand for the other good
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T1: An example of complementary goos would be
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hamburgers and fries
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T1: The law of demand says that when price
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rises, quantity of demand falls
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T1: When quantity of demand decrease at every price we know that the demand curve has
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shifted to the left
