question

is the additional cost to you over and above any cost you have already incurred.

answer

The marginal cost of consuming another unit of a good...

question

will enhance their own overall well-being.

answer

Economic theory asserts that people will behave in ways that...

question

how people make choices under the conditions of scarcity and the results of the choices.

answer

Economics is best defined as the study of

question

False

answer

If an economy's resources are used efficiently, then it is guaranteed that the economy will also achieve equity. {calc} T or F

question

people tend to do more of something when the benefits are greater.

answer

According to the incentive principle...

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if the marginal benefit of the last unit of an activity exceeds its marginal cost, then more of that activity should be undertaken.

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Rational decision making means that...

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what you gave up to get it

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For an economist, the cost of something is...

question

they are given incentives to do so.

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Economists generally agree that people are most likely to change their behavior when ...

question

allocate scarce resources.

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The purpose of an economic system is to...

question

it is not possible to produce a given quantity of output at a lower cost.

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If production is efficient, then:

question

individual choice.

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The focal point of economic inquiry is

question

choices must be made in the allocation of productive resources.

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The condition of scarcity means that

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is the additional benefit above what you have already derived.

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The marginal benefit from consuming another unit of a good:

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B resources are scarce. C choices involve a trade-off. both b and c.

answer

We have to make choices because:

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The allocation of scarce resources is determined by the decentralized decisions of individuals.

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Which one of the following statements is true of a market economy but not true of a command economy?

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government may intervene to improve society's welfare.

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When markets don't achieve efficiency, then:

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Trade

answer

Most individuals choose careers in which they specialize in producing only one type of good or service, yet as consumers they have access to a wide variety of goods and services. What principle allows for this?

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harness the power of individual self-interest for the good of society as a whole

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Adam Smith used the idea of the invisible hand to refer to the ability of market economies to

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market power.

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When a single person (or small group) has the ability to influence market prices, there is

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refers to the quantity of goods and services produced from each hour of a worker's time.

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The term "productivity"

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an increase in the overall level of prices in the economy

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Inflation is defined as

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irregular fluctuations in economic activity.

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The business cycle is the

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John's actions on Jane's well-being.

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An example of an externality is the impact of

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True

answer

Goods are scarce because society's desire for them exceeds society's ability to produce them.

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how scarce resources are allocated to fulfill society's goals.

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The best description of the focus of economics is:

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the best alternative use of your time.

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The opportunity cost of studying for an economics test is:

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there are opportunities available to people to make themselves better off.

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When a market is not in equilibrium

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True

answer

Scarcity results when available resources cannot satisfy all desired uses of those resources.

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incentives act as rewards that encourage people to behave in certain ways.

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People respond to incentives because

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All above

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When individuals decide how much of an activity they should do,

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goods or services that are forgone in order to obtain something else.

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Opportunity cost may be defined as the:

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all are true

answer

In making choices people find that

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there is a tendency for markets to move toward equilibrium

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Which of the following statements is true?

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increases the amount of goods and services available in an economy.

answer

Specialization in production and trade

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the issue of fairness

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The concept of equity focuses on

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this interaction must increase economic efficiency

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When people interact in markets we know that

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True

answer

All output combinations that lie on the production-possibilities curve are characterized by efficient use of resources.

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Bowed outward

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If an economy experiences increasing opportunity costs with respect to two goods, then the production-possibilities curve between the two goods will be:

question

are a simplified representation of reality.

answer

Economic models

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False

answer

Positive economic analysis employs analysis to answer questions about how the economy should work.

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True

answer

If the economy is inside the production-possibilities curve, then more output can be produced using existing resources.

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False

answer

All output combinations that lie outside a production-possibilities curve are attainable with available resources and technology.

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A shift outward of the production-possibilities curve

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A technological advance would best be represented by:

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True

answer

Macroeconomics addresses the economy as a whole.

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All of the above

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Which of the following events would allow the production-possibilities curve to shift outward?

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greater specialization of labor and other factors of production.

answer

Application of the Principle of Comparative Advantage leads to

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Comparative advantage does not require absolute advantage.

answer

Which of the following statements is always true?

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can produce more and/or higher quality software in a given amount of time.

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To say that an individual possesses an absolute advantage in the production of software means that that individual

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you give up less to accomplish that task than do others

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Having a comparative advantage in a particular task means that

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has a low opportunity cost for writing a term paper.

answer

Larry has a comparative advantage in writing a term paper if he

question

importa

answer

Goods produced abroad and sold domestically

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Gains from trade

answer

Enables people to enjoy greater production, and higher living standards, than would be otherwise possible

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Absolute advantage

answer

The ability to produce a good with fewer resources than other producers (i.e., better than other people).

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Comparative advantage

answer

The ability to produce a good at a lower opportunity cost than others could

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Specialization

answer

A method of production in which each person concentrates on a limited number of activities (i.e., the things they are relatively good at)

question

Exports

answer

Goods produced domestically and sold abroad

question

All of the above

answer

Specialization and trade are beneficial to two countries {calc}

question

True

answer

Individuals or countries have a comparative advantage in producing a good when they produce that good with a lower opportunity cost than can another individual or country.

question

False

answer

By specializing according to their absolute advantage and then engaging in trade, individuals and countries are better off.

Microeconomics Chapters 1-4 – Flashcards

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