Microeconomics Ch. 1 Flashcard
Unlock all answers in this set
Unlock answersquestion
Better at neither productive efficiency nor allocative efficiency because the absence of market imposed competition negates the needs of firms to satisfy consumer wants or produce using lowest-cost methods
answer
Relative to a market economy, a centrally planned economy would be expected to be
question
a, b, and c
answer
Consider the following, which are incentives: a. lower priced gas b. less costly c. produce more of DVDs
question
lowest possible cost
answer
Productive efficiency is
question
every good or service produced to a point where the marginal benefit is equal to the marginal cost
answer
Allocative efficiency is
question
highest valued alternative that must be given up
answer
Opportunity cost
question
d. make value judgements to be proven or not
answer
Which of the following is NOT a step to develop an economic model? a. decide on assumptions b. use economic data c. formulate testable hypothesis d. make value judgements to be proven or not e. revise model if it fails to prove
question
What goods will be produced How will they be produced Who will receive the goods
answer
What are the 3 economic questions to be answered?
question
government, households & firms
answer
In centrally planned economics, decisions are made by the ________, while in market economics, decisions are made by ________
question
mixed economy
answer
A ________ results from actions of buyers and sellers where government plays a SIGNIFICANT role in allocation of resources
question
Marginal Benefit = Marginal Cost
answer
Marginal (extra or additional) optimal decisions occur when
question
scarcity
answer
In economics, choices must be made because we live in a world of
question
Scarcity refers to the situation in which unlimited wants exceed limited resources
answer
Which of the following is true about scarcity?
question
scarcity
answer
the basic economic problem of ______ has always existed and will continue to exist
question
the choices people make to attain their goals, given their scarce resources
answer
By definition, economics is the study of
question
model
answer
An economic ______ is a simplified version of some aspect of economic life used to analyze an economic issue
question
are rational and respond to incentives
answer
Economists assume that individuals
question
rationally
answer
Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ______, meaning they make the best decisions given their knowledge of the costs and benefits
question
marginal benefit equals the marginal cost
answer
Economists reason that the optimal decision is to continue any activity up to the point where the
question
trade-off
answer
The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of
question
There is too little production of low cost, high quality goods and services
answer
Which of the following is a problem inherent in centrally planned economies?
question
competition and voluntary exchange
answer
Markets promote
question
economic benefits are distributed fairly
answer
In economics, the term 'equity' means
question
There is no conflict between the two goals
answer
Which of the following correctly describes the relationship between economic efficiency and economic equity?
