exam 1 eco – Flashcards
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the author of the textbook defines economics as the science of
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scarcity
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what are the four broad categories of resources?
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land, labor, capital, and entrepreneurship
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entrepreneurship is the ________ for organizing the use of land, labor and capital, among other things.
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talent
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the physical and mental talents people bring to production processes compromise the resource called
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labor
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the higher the opportunity cost of attending college the less/ more likely an individual will go to college.
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less
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in every economy people vie for the economy's rationing device, a process called
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competition
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opportunity cost is the value of the best (or most highly valued)_____ alternative.
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forfeited
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macroeconomics deals with
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the entire economy
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the synonym economists commonly use for additional is
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marginal
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scarcity is defined as the condition in which wants are ______ and resources are ______
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infinite; finite
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something that provides dis-utility is called a
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bad
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what does it mean if a person makes a "decision at the margin"?
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the person compares additional benefits and additional costs when deciding what to do.
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to an economists, utility means
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satisfaction
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a theory is
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- built on the major factors or variables that the theorists believes explain some event. - a simplified abstract representation of the real world - used to understand the real world
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ceteris paribus means
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all other things held constant or nothing else changes
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elite colleges and universities use standardized test scores (such as sat and act scores) and high school grades as a
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rationing devices
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it is possible through trade for a country to consume a combination of goods that lies beyond its production possibilities frontier?
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true
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points that lie inside ( or below) the ppf are attainable, but
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productive inefficient
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if increasingly more units of good Y must be given up as each successive unit good X is produced, then the PPF for these two goods is a _______ sloping curve that is bowed out.
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downward
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a productive efficient society
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- produces at a point on its ppf - can produce more of one good only by giving up some of another good - cannot produce unlimited amounts of a good - still has to make choices
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a society is productive inefficient when
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- it produces at a point inside (below) its ppf - it does not produce the maximum outpoint with its given resources and technology - it can produce more of one good without giving up some another good
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if luke can bake bread at a lower opportunity cost than jason, and jason can produce paintings at a lower opportunity cost than luke, it follows that_______ has a comparative advantage in baking bread and __________ has a comparative advantage in producing paintings.
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Luke; Jason
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a person has a comparative advantage in the production of a good when they can produce the product at a _______ opportunity cost compared to another person.
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lower
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if max's demand for hot dogs falls as his income rises, then for Max, hot dogs are an ________ good.
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inferior
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as a price of good A rises the demand for B rises. therefore good A and B are
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substitutes
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the law of supply states that price and quantity supplied are _____ related, ceteris paribus.
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directly
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an advance in technology in the production of good X causes a ________ shift in the supply curve for good X.
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rightward
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what change will not shift a supply curve but will cause a change in quantity supplied?
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a change in the goods own price
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at a price above the equilibrium price, there is a
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surplus
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at a price below the equilibrium price, there is a
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shortage
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on a supply-and-demand diagram, equilibrium is found
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where the demand and supply curves intersect
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a " decrease in demand" shifts the demand, curve to the
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left
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the law of demand states that price and _______ are _______ related, ceteris paribus
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quantity demanded; inversely
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one reason that helps to explain the law of demand is the law of
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diminishing marginal utility
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a market is said to be in disequilibrium if it exhibits either a _______ or _______
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surplus; shortage
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are DVD's and DVD players complements?
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yes
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a _______ good is one in which as income rises or falls, there is no change in the demand for the good.
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neutral
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what can change equilibrium price and quantity
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- whenever demand changes - whenever supply changes - whenever supply and demand changes
