Microeconomics Ch 1-4 – Flashcards
Unlock all answers in this set
Unlock answersquestion
Economy
answer
The English word that comes from the Greek word for "one who manages a household"
question
Scarce for households and scare for economies
answer
Resources are
question
The combined actions of millions of households and firms
answer
In most societies, resources are allocated by
question
Individuals, families, societies
answer
The principle that "people face trade offs" applies to
question
Efficiency and equality
answer
A typical society strives to get the most it can from its scare resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. In other words, the society faces a trade off between
question
What you give up to get it
answer
In economics, the cost of something is
question
Comparing marginal costs and marginal benefits
answer
Rational people make decisions at the margin by
question
Alter incentives, alter trade-offs, change opportunity costs
answer
Which of the following can policy do?
question
Both
answer
Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level. Which country can benefit?
question
Lower and raises the variety of goods and services available
answer
Trade makes costs
question
Government should become involved in markets when those markets fail to produce efficient or fair outcomes
answer
The basic principles of economics suggest that
question
Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes
answer
Which of the following observations was made famous by Adam Smith in his book "The Wealth of Nations?"
question
Firms and households
answer
In a market Economy, who makes the decisions that guide most economic activity?
question
Market failure
answer
The term used to describe a situation in which markets do not allocate resources efficiency is
question
Refers to the quantity of goods and services produced from each unit of labor input
answer
The term " productivity"
question
Inflation
answer
An increase in the overall level of prices in an economy is referred to as
question
Business cycle
answer
Irregular fluctuations in economic activity are known as the
question
To provide a new and useful way of thinking about the world
answer
Economists use some familiar terms in specialized ways
question
Deciding which assumptions to make
answer
The art in scientific thinking-- whether in chemistry, economics, or biology -- is
question
Inputs into the production process
answer
Factors of production are
question
Buildings and machines used in the production process
answer
In economics, capital refers to
question
Markets for goods and services and markets for factors of production
answer
Which markets are represented in the simple circular-flow diagram?
question
How individual households and firms make decisions
answer
Microeconomics is the study of
question
Differences in personal values
answer
Which of the following is one of the basic reasons why economists often appear to give conflicting advice to policy makers?
question
Mathematician, historian, philosopher
answer
According to economist John Maynard Keynes, a great economist must also be a(n)
question
Consume more goods than we otherwise would be able to consume
answer
The most obvious benefit of specialization and trade is that they allow us to
question
Comparative advantage
answer
When describing the opportunity cost of two producers, economists use the term
question
Lower than his or her opportunity cost of that good
answer
A person can can benefit from specialization and trade by obtaining a good at a price that is
question
Goods produced domestically and sold abroad
answer
By definition, exports are
question
Supply and demand determine prices, in turn, allocate the economy's scarce resources
answer
In a market economy,
question
Market
answer
A group of buyers and sellers of a particular good or service is called a(n)
question
Highly competitive
answer
Most markets I the economy are
question
Falls, the quantity demanded of the good rises
answer
The law of demand states that, other things equal, when the price of a good
question
Is the sum of all individual demand curves
answer
The market demand curve
question
Inferior good
answer
If a decrease in income increases th demand for a good, then the good is a (n)
question
Increases the demand for the other good
answer
Two goods Re complements when a decrease in the price of one good
question
Exactly equals the quantity that sellers are willing and able to sell
answer
At the equilibrium price, the quantity of the good that buyers are willing and able to buy
question
Whoever is willing and able to pay the price
answer
Who gets scarce resources in a market economy?
question
Prices
answer
In a market economy, who or what determines who produces each good and how much is produced?
