Econ 101: CHP 1 – Flashcards

Macroeconomics deals with: bits and pieces of the economy. how a business unit should operate profitably. how individuals make decisions. the working of the entire economy or large sectors of it.

Scarcity exists when: individuals can have more of any good without giving up anything. individuals can have more of one good but only by giving up something else. resources are unlimited. making choices among two or more alternatives is not necessary.

. When a chef prepares a dinner for a customer, which of the following is physical capital? the chef's training and experience the oven the food ingredients the chef

Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is: -$10,000. -whatever she would have purchased with the $10,000 plus whatever she would have earned had she not been in college. -whatever she would have earned had she not been in college. whatever she would have purchased with the $10,000 instead.

You have $1 to spend on a vending machine snack. A bag of chips will cost you $1 and a candy bar will also cost you $1. If you choose the bag of chips, the opportunity cost of buying the chips is: $1. the enjoyment you would have received from the candy bar. $1 plus the enjoyment you would have received from the candy bar. $2 minus the enjoyment you received from the bag of chips.

You decide whether to eat one more slice of pizza based on how hungry you feel. This statement best represents this economic concept: The real cost of something is what you must give up to get it. There are gains from trade. Resources are scarce. "How much" is a decision at the margin.

You are analyzing a trade-off when you compare the _____and _____ of doing something. direct costs; total costs direct costs; opportunity costs marginal benefits; total benefits costs; benefits

Corner offices in high-rise office buildings usually cost more to rent than other offices. This best illustrates the economic principle of: scarce resources. resources being used as efficiently as possible to achieve society's goals. marginal analysis. opportunity costs.

After swimming 100 laps at the pool, Erik decides to swim 10 more before lifting weights. This statement best represents this economic concept: The real cost of something is what you must give up to get it. There are gains from trade. Resources are scarce. "How much" is a decision at the margin.

Florida schools offered cash bonuses to students who scored high on the state's standardized exams. The cash bonuses are an example of this economic principle: Resources are scarce. -People usually take advantage of opportunities to make themselves better off. There are gains from trade. The real cost of something is what you must give up to get it.

If every individual were required to be self-sufficient: it's impossible to say how living standards would change. living standards would fall. living standards for some individuals would fall, but for others they would rise. living standards would rise.

Which of the following statements is TRUE? The concept of equilibrium requires that all individuals have an equal amount of income. If a market is in equilibrium, the price in that market will not fluctuate by more than 5%. If a market is in equilibrium, there will be no remaining opportunities for individuals to make themselves better off. A market is in equilibrium when the number of buyers is equal to the number of sellers.

An economy is efficient when: output is distributed equitably. the problem of scarcity is eliminated. all opportunities to make some people worse off without making other people better off have been taken. all opportunities to make some people better off without making other people worse off have been taken.

When individuals act in their own self-interest: equity is always achieved. all opportunities have been taken to make some people better off without making other people worse off. efficiency is always achieved. society may be worse off in some cases.

If in Equitania, 20% of the population receive 80% of the income and the remaining 80% of the population receive 20% of the income, Equitania's economy: may be efficient. is efficient. is neither efficient nor equitable. cannot be efficient, since efficiency requires a more nearly equal distribution of income.

Market failure occurs when: prices of essential goods such as gas become very high. mutually beneficial trades take place. a business declares bankruptcy. individual actions have side effects that are not properly taken into account.

When a factory closes, why does it spell bad news for the local restaurants? The opportunity cost of dining out has fallen. Sales taxes are likely to increase. Unemployed factory workers are eligible for government unemployment benefits. Unemployed factory workers have lower incomes and are less likely to dine out.

Sometimes the government varies its spending, depending on the needs of the country. This statement best represents the economic concept that: when markets don't achieve efficiency, government intervention can improve society's welfare. resources should be used as efficiently as possible to achieve society's goals. overall spending sometimes gets out of line with the economy's productive capacity. government policies can change spending.

The federal government regulates how much carbon dioxide a factory can emit. This statement best represents this economic concept: When markets don't achieve efficiency, government intervention can improve society's welfare. Resources are scarce. Markets usually lead to efficiency. "How much" is a decision at the margin.

When people want more goods and services than are available, the economy undergoes inflation. This statement best represents this economic concept: Overall spending sometimes gets out of line with the economy's productive capacity. Government policies can change spending. Resources are scarce. When markets don't achieve efficiency, government intervention can improve society's welfare.