question

Our economic wants far exceed the ______.

answer

productive capacity of our scarce resources

question

The social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity.

answer

Economics

question

The way economists view things from a unique perspective; an economic way of thinking that has several critical and closely interrelated features. Viewing the world through the lens of scarcity

answer

economic perspective

question

To obtain more of one thing, society forgoes the opportunity of getting the next best thing. That sacrifice is the opportunity cost of the choice.

answer

opportunity costs

question

The core of economics is the idea that "there is no free lunch." You may be treated to lunch, which is "free" for you, but someone bears the cost-ultimately society. Scarce resources are required. Because society could have used these resources to produce something else, it sacrifices those other goods and services in making the lunch available. This is an example of ______

answer

opportunity costs

question

The pleasure, happiness, or satisfaction obtained from consuming a good or service. They allocate their time, energy, and money to maximize their satisfaction.

answer

utility

question

With utility, because people weigh costs and benefits, their economic decisions are _____ or ______, not "random" or "chaotic."

answer

"purposeful" or "rational"

question

With purposeful behavior, how are consumers purposeful?

answer

with deciding what goods and services to buy

question

With purposeful behavior, how are business firms purposeful?

answer

with deciding what products to produce and how to produce them

question

With purposeful behavior, how are government entities purposeful?

answer

with deciding what public services to provide and how to finance them.

question

With purposeful behavior, economics assumes that human behavior reflects _____?

answer

rational self-interest

question

What does purposeful behavior mean?

answer

People make decisions with some desired outcome in mind.

question

The Economic Perspective focuses on what 3 aspects?

answer

1. Scarcity and Choice 2. Purposeful Behavior 3. Marginal Analysis: Benefits and Costs

question

What is marginal analysis?

answer

comparisons of marginal benefits and marginal costs, usually for decision making. Most choices or decisions involve changes in the status quo, meaning existing state of affairs.

question

With marginal analysis, each option involves marginal benefits and, because of scarce resources, ____ _____.

answer

marginal costs

question

With marginal analysis, in making choices rationally, the decision maker must compare ___ amounts.

answer

two amounts

question

With marginal analysis, opportunity costs are present whenever a _______.

answer

decision is made

question

With marginal analysis, in a world of scarcity, the decision to obtain the marginal benefit associated with

answer

some specific option always includes the marginal cost of forging something else.

question

What is an economic principle?

answer

A statement about economic behavior of the economy that enables prediction of the probable effects of certain actions

question

Examines either the economy as a whole of its basic subdivisions or aggregates, such as government, household, and business sectors.

answer

Macroeconomics

question

With macro, a collection of specific economic units treated as if they were one unit.

answer

Aggregate.

question

In using aggregates, macroeconomics seeks to . . .

answer

obtain an overview, or general outline, of the structure of the economy and the relationships of its major aggregates.

question

Micro of Macro speaks of such economic measures as total output, total employment, total income, aggregate expenditures, and the general level of prices in analyzing various economic problems.

answer

Macro

question

The part of economics concerned with individual units such as a person, a household, firm, or an industry.

answer

Microeconomics

question

At this level of analysis, the economist observes the details of an economic unit, or very small segment of the economy, under a figurative microscope.

answer

Microeconomics

question

Micro or Macro where we look at decision making by individual customers, workers, households, and business firms. Measure the price of a specific product, the number of workers employed by a single firm, the revenue or income of a particular firm, government entity, or family.

answer

Micro

question

Focuses on facts and cause-and-effect relationships. It includes description, theory development, and theory testing(theoretical economics). Avoids value judgments, tries to establish scientific statements about economic behavior, and deals with what the economy is actually like.

answer

Positive economics

question

Incorporates value judgments about what the economy should be recommended to achieve a desirable goal (policy economics). It looks at the desirability of certain aspects of the economy. It underlies expressions of support for particular economic policies.

answer

Normative economics

question

"The unemployment rate in France is higher than that in the US." Norm or Pos?

answer

Positive

question

"France ought to undertake policies to make its labor market more flexible to reduce unemployment rates" Norm or Pos?

answer

Normative

question

Most of the disagreement among economists involves norm or pos questions.

answer

Normative, which means most economic controversy reflects differing opinions or value judgments about what society should be like.

question

The need to make choices because economic want exceed economic means.

answer

economizing problem

question

What 3 things are part of the INDIVIDUAL economizing problem?

answer

1. Limited Income 2.Unlimited Wants-can never be fully satisfied 3.A Budget Line

question

Because we have only limited income but seemingly insatiable wants, it is in our self-interest to economize: . . .

answer

to pick and choose goods and services that create maximum utility.

question

A schedule or curve that shows various combinations or 2 products a consumer can purchase with a specific money income

answer

Budget line(budget constraint)

question

What 3 aspects are part of A Budget Line?

answer

1. Attainable and Unattainable Combinations 2.Tradeoffs and Opportunity Costs 3.Choice 4.Income changes

question

With A Budget line, with attainable and unattainable combinations, u can only buy things that are . . .

answer

within ur budget, not things that are unattainable. All combinations beyond the budget line are unattainable.

question

With A Budget line, with Tradeoffs and Opportunity Costs, the straight-line budget constraint, with its constant slope, indicates ____

answer

constant opportunity cost

question

With A Budget line, with Choice, limited income forces people to choose what to . . .

answer

buy and what to forgo to fulfill wants. You will evaluate your marg b and c to make choices that maximize your satisfaction. Other people will make diff choices then you will.

question

With A Budget line, with Income Changes, an increase in money income shifts the budget line to the ___, a decrease in money shifts to the ____.

answer

increase:right, decrease:left

question

What 2 things are involved in Society's Economizing Problem?

answer

Scarce Resources and Resource Categories: land, labor, capital, and entrepreneurial ability

question

All natural, human, and manufactured resources that go into the production of goods and services.

answer

Economic resources

question

What 4 general categories to economists classify economic resources?

answer

Land, Labor, Capital, and Entrepreneurial Ability

question

All manufactured aids used in producing consumer goods and services. Ex: all factory, storage, transportation, and distribution facilities, as well as tools and machinery.

answer

Capital

question

Economists refer to the purchase of capital goods as ____.

answer

investment

question

What is the difference between capital goods and consumer goods?

answer

Consumer goods satisfy wants directly, whereas capital goods do so indirectly by aiding the production of consumer goods.

question

Because land, labor, capital, and entrepreneurial ability are combined to produce goods and services, they are called the _______.

answer

factors of production, or "inputs"

question

What 4 aspects are part of the Production Possibilities Model?

answer

Production Possibilities Table, PP Curve, Law of Increasing Opportunity Cost and Optimal Allocation

question

The Production Possibilities Model initially assumes what 4 things?

answer

Full employment, Fixed resources, Fixed technology, and Two goods

question

The alternatives and choices society faces can be understood through this macroeconomic model of production possibilities.

answer

Production Possibilities Model

question

The Production Possibilities Model, explain fixed technology.

answer

The method used to produce output is constant

question

The Production Possibilities Model, explain full employment

answer

Econ employing all available resources

question

The Production Possibilities Model, explain fixed resources

answer

The quality and quantity of the factors of production are fixed.

question

The Production Possibilities Model, explain two goods

answer

Econ producing only 2 goods: consumer goods and capital goods.

question

With the Production Possibilities Model and the graph for it, why are A and E the 2 extremes?

answer

A represents economy devoted all its available resources to the production of robots(capital goods) and E would be for pizzas(consumer goods). They are unrealistic extremes because an economy typically produces both capital and consumer goods.

question

_____ lists the different combinations of two products that can be produced with a specific set of resources, assuming full employment.

answer

Production Possibilities Table

question

The data presented in a production possibilities table are shown graphically as ______. This displays the different combination of goods and services that society can produce in a fully employed economy, assuming a fixed availability of supplies of resources and constant technology.

answer

Production Possibilities Curve

question

With the Production Possibilities Curve, why is the curve a constraint?

answer

because it shows the limit of attainable outputs. Points on the curve are attainable as long as the economy uses all its available resources.

question

Principle: as the production of a particular good increases, the opportunity cost of producing an additional unit rises. Ex: comparing the point of pizzas vs. robots on a Production Possibilities Table.

answer

Law of Increasing Opportunity Costs

question

The law of increasing opportunity costs is reflected in the shape of the ______.

answer

production possibilities curve. The curve is bowed out from the origin of the graph and shows that when the economy moves from A to E, it must give up successively larger amounts of industrial robots.

question

The economic rationale for the law of increasing opportunity costs is that . . .

answer

economic resources are not completely adaptable to alternative uses. Many resources are better at producing one type of good than at producing others.

question

Economic Rationale and increasing opportunity costs for society

answer

Start and A and move to B, there is a shift in resources whose productivity is relatively high in pizza production and low in industrial robots. As we move from B to C, C to D, and so on, resources highly productive of pizzas become increasingly scarce. To get more pizzas, resources whose productivity in industrial robots is relatively great will be needed.

question

With MC and MB, any economic activity should be expanded as long as ___ exceeds ____.

answer

marginal benefit exceeds marginal cost. It should be reduced if MC exceeds MB

question

With MB and MC, the optimal amount of activity occurs when (what formula)?

answer

MB=MC

question

With unemployment in the PP Model, a move toward full employment would yield . . .

answer

a greater output of one or both parties

question

*Is Economics an old or new branch of study?

answer

New

question

*What is micro?

answer

Management of my business unit (more narrow than macro).

question

*What were Adam Smith's 2 concerns and did an investigation cuz of it?

answer

1. Why some nations are rich and some are poor 2. Even if country rich, country still had poor and rich. Refering to UK cuz rich and was dominating nation.-This is cuz of lack of edu, etc.

question

*What did Adam Smith write in 1759?

answer

"The Theory of Moral Sentiment"

question

*From Adam Smith, it was discovered that export driven nations are _____ and import driven nations are____.

answer

export driven = wealthy import driven = poor Ex today: China, India vs. Africa, Bangladesh

question

*What is economics?

answer

Exploring the prosperity of nations and reasons why prosperity. How resources are being distributed. Reason for prosperity is poverty.

question

*FED-what they do, when they came around

answer

Can pump $ into the economy. They came up in 1930s, but never involved with running of the country. Only made sure that $ circulating. No bailouts. Bank failures

question

*Economics boils down to decisions by trends or individual made by who?

answer

humans. Part of qualitative social science

question

*Who came up with(DC?) economics being concerned with human behavior (social science) and the science of human survival, sustainability and progress.

answer

J.M. Keynes

question

*Economics studies the _____, ______, and ______ of goods and services. If this cycle is disrupted, then everything falls apart, like econ right now.

answer

Production(manufact), Distribution(market), and Consumption(consumers) of goods and services.

question

*With the market, a producer's incentive is ____ and a consumer's incentive is ____.

answer

Producer: profit-to maximize it. Consumer-satisfaction of what buying (qualitative)

question

*As a social science, Economics today is more of science and math or art?

answer

More of science and math

question

*What 2 factors are effecting our economy now?

answer

1.Element of greed in CEOs=things collapse Fear-where peeps investing today. 2. Not sure about where $ will go or our jobs.

question

*Macro

answer

broad picture

question

*Micro

answer

single unit. The study of units, individual households, like ex: GM

question

*What does an Economist do?

answer

They have estimates, continually changes and need to update to go w/ the changes. Predictions are based on past trends, if it continues. But things can change-that are unpredictable.

question

*What does "Economic Methodology" mean? What 2 types of statements come from this?

answer

How economics is done or the way it should be done. How do you resolve and study these issues of the economy. 2 Statements: Positive and Normative

question

*"Price control during drought will lead to food shortages and starvation death" Example of normative or positive?

answer

Positive- because it conforms the reality and you can get info on "price control", supply and deathrate.

question

*"People should be protected against price gouging, during a drought; hence the Government should use price control." Example of normative or positive?

answer

Normative

question

*What are the 5 steps in Economic Analysis (A Scientific Approach) ?

answer

1.Recognize the problem (ex: bankruptcy, recession, loans, etc) 2.Make assumptions 3.Develop a model 4.Make predictions 5.Test the model

question

*Marginal

answer

refers to extra/additional or next best.

question

*The best next alternative and how much it costs. Sacrifice should be less value than benefit. Ex: taking this class is a small sacrifice for more huge benefit. Which principle?

answer

The Principle of Increasing Opportunity

question

*Principle: Having more of one good thing usually means having less of another

answer

The Scarcity Principle

question

*Principle: Take no action unless its marginal benefit is at least as great as its marginal cost

answer

The Cost-Benefit Principle

question

*Principle: Use the resources with the lowest opportunity cost before turning to those with higher opportunity costs.

answer

The Principle of Increasing Opportunity

question

*Principle: Efficiency is an important social goal, because when the economic pie grows larger, everyone can have a larger slice. Basically, goal to use resources efficiently.

answer

The Efficiency Principle

question

*What 2 reasons is the econ bad now?

answer

1.Savings have ↑, even though people have jobs, they are saving more for the future cuz uncertain of future. 2. Peeps lost jobs

question

*Why is self-interest not selfish?

answer

Not selfish because of the Spill-over or Ripple effect cuz self-interest has an effect on helping others also, not just you. It pays the laborers, helps increase better resources for the company, etc.

question

*What is a hypothesis?

answer

A statement that can be tested, meaning it can be proved or disproved.

question

*If it is market driven, then it is _____ driven

answer

consumer driven

question

*Production is dominated by these 3 types

answer

1.Labor Intensive (labor driven) 2.Capital Intensive (Capital Driven) 3.Knowledge based technology

question

*What are the 4 fundamental questions before decision makers?

answer

1.What to produce? 2.How to produce it?-choice of technology and technique of the product driven by the available resources. 3.For whom to produce? 4.How to accommodate change?

question

*What is free market?

answer

gov doesn't intervene, but not a successful business model

question

*"The Market System" is an economic principle coined by who?

answer

Adam Smith(1776: An Inquiry into the nature and causes of the wealth of nations)

question

*The 1776 book written by Adam Smith was about?

answer

Said that the greatest benefit to a society is brought about by individuals acting freely in a competitive marketplace in the pursuit of their own self-interest.

question

*With Adam Smith, what is the "Invisible Hand"?

answer

A natural phenomenon that guides free markets and capitalism through competition for scarce resources.

question

*What are the 2 measures of econ efficiency with the Efficiency Principle?

answer

Productive and Allocative

question

*With the Efficiency Principle, what is Productive?

answer

least-cost method of production

question

*With the Efficiency Principle, what is Allocative?

answer

Producing goods/services most desired by the society.

question

*4 parts of Great Depression

answer

1.Very high level of unemployment-25% (today 9.5%) 2.Fall in Prices (General Price Level). --no job = no means to buy stuff = lower prices-- 3. Deflation. Bankruptcy, Overproduction 4.Role of Central Bank (FED)- Federal Reserve

question

*Describe the 4th question of the 4 fundamental questions before decision makers?

answer

How to accommodate change 1.Guiding function of price 2.Promoting technological advances-for the long run, needs to be updated constantly. 3.Promoting capital accumulation ---Because of constant changes, does econ have skills to change and adapt.

question

*What does each point represent in the formula ∏ = TR-TC

answer

TR= revenue measured of goods sold at one price= p∙q (price ∙ quality). TC is FC + VC (fixed cost and variable cost)

question

*What is Normative and its language?

answer

Lang: ought to be, should be, can be, (good/bad). Qualitative, value based= driven by one's opinion. Can be very subjective in nature = vary from person to person-opinion based

question

*What is Positive and its lang?

answer

Lang: it is, it was, it will be. Quantitative empirical- data is objective. Cause and effect

question

*In a market, what is a producer's incentive?

answer

Incentive is profit and to maximize it

question

*In a market, what is the consumer's incentive?

answer

Incentive is Satisfaction(qualitative) of what buying and Utility-how useful it is, maximization

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