Econ 202 Exam 1 CSU – Flashcards
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The doctrine of laissez faire
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Markets are likely to do a better job of allocating resources than government directives.
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A mixed economy
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Utilizes both market and nonmarket signals to allocate goods and services.
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Economics can be defined as the study of
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How scarce resources are allocated.
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A production possibilities curve indicates the
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Maximum combinations of goods and services an economy can produce given its available resources and technology.
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The fact that there are too few resources to satisfy all our wants is attributed to
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Scarcity.
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The goal of the consumer in a market economy is to use his or her limited income to
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maximize total utility
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If the government places a price ceiling on cancer-treating drugs, then
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Fewer cancer treating drugs will be available.
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A shift in supply is defined as a change in
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Supply because of a change in a determinant of supply.
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An increase in the supply of gasoline, ceteris paribus, will cause equilibrium price
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To fall and equilibrium quantity to rise.
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opportunity cost refers to the
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The most desired good or service given up when something is obtained.
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An indifference curve shows the
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Combinations of goods giving equal utility to a consumer. (aka no preference)
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The market demand for a product is
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The sum of all of the individual demands for that product.
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a rational consumer will consume until marginal utility is
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zero
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Sociopsychiatric explanations of consumer behavior include the
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Desire for ego and status.
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Economic explanations of consumer behavior take into consideration
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Prices and income.
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In the article "Men vs. Women: How They Spend,"
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Both sexes spend more than they earn.
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The law of diminishing marginal utility gives us a deeper understanding of the downward-sloping demand curve because
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When marginal utility is high, we are willing to pay a higher price.
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As more satisfaction is achieved from consuming a good with diminishing marginal utility, then total utility
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Increases at a decreasing rate.
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Any point on the budget constraint
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Represent a combination of two goods that are affordable.
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The slope of the indifference curve is equal to the
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Marginal rate of substitution.
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Elasticity of supply looks at
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How responsive sellers are to a change in price.
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A price change will have no effect on total revenue if demand is
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Unitary.
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The total revenue effect of a movement along a demand curve can best be predicted using the
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Price elasticity of demand.
