Microeconomics Chapters 1&2 – Flashcards

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For economists, the word "utlity" means:
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rationality
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In economics, the pleasure, happiness or satisfaction received from a product is called:
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utility
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When economists say that people act rationally in their self-interest, they mean the individuals:
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look for and pursue opportunites to increase their utility
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Economics may best be defined as the:
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social science with how individuals, instituations, and society make optimal choices under conditions
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The study of economics is primarily concerned with:
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choices that are made in seeking the best use of reasources
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Economics involves marginal analysis because:
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most decisions involve changes from the present situation
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Opportunity costs exsit because:
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wants are scarce relative to resources
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The assertion that "there is no free lunch" means that:
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all production involves the use of scarce resources and thus the sacrifice of alternatives
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Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase. This is a reflection of:
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purposeful behavior
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In deciding whether to study for an economics quiz or go to a movie, one is confronted by the idea(s) of:
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scarcity and opportunity costs
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Which one of the following expressions best states the idea of opportunity cost?
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"There is no such thing as free lunch"
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The Latin Term "ceteris paribus" means"
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other things equal
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The term "other things equal" means that:
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a number variables are assumed to be constant
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Macroeconomics approaches the study of economics from the viewpoint of:
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the entire economy
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Microeconomics is concerned with:
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a detailed examination of specific economic units that make up the economic system
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Microeconomics:
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Is concerned with individual economic units and specific markets
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Which of the following is a microeconomic statement?
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The price of personal computers declined 4.7 percent last year
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The economizing problem is:
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the need to make choices because economic means scarcity
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The economizing problem is one of the deciding how to make the best use of:
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limited resources to satisfy virtually unlimited wants
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The scarcity problem:
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Persists only because economic wants exceed available productive resources
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The budget line shows:
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all possible combinations of two goods that can be purchased, given money, income and prices of the goods.
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IN moving along a given budget line:
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the prices of both products and money income are assumed to be constant
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An increase in money income:
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shifts the consumer's budget line to the right
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The shift of the budget line form cdd to ab (left) in the figure is consistent with:
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a decrease in money income
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Other things equal, an increase in a consumer's money income:
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shifts the individual's budget line rightward because she can now purchase more of both
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The slope of a budget line reflects the:
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price ration of the two products
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The four factors fo production are:
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land labor capital entrepreneurial ability
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Economic resources are also called:
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factors of production
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If the production possibilites curve is a straight line:
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economic resources are perfectly substituable between the prodcution of the two products
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A production possibilites curve illustrates:
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scarcity
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The production possibilites curve:
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shows all those combinations of two goods that are most preferred by society
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Any point inside the production possibilities curve indicates:
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the more output could be produced with the available resources
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The slope of the typical production possibilites curve:
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Increases as one moves southeast along the curve
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The negative slope of the production possibilites curve is graphical way of indicating that:
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to produce more of product we must do with less of another
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If an economy is operating on its production possibilites curve for consumer goods and capital good, this means that:
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more consumer goods can only be produced at the cost of fewer capital goods
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A typical concave (bowed out from the origin) production possibilites curve implies:
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the society must choose among various attainable combinations of goods
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The face that the slope of the production possibilities curve becomes steeper as we move down along the curve indicates that:
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the opportunity cost of producing each product is constant
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The law of increasing opportunity costs states that:
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if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of another to do so
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The law of increasing opportunity costs is reflected in production possibilities curve that is:
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bowed out from the origin
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The optimal point on a production possibilities curve is achieved where:
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each good is produced at a level where marginal benefits equal marginal costs
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The marginal benefit curve is:
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downsloping because successive units of a specific product yeild less and less extra benefit
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The marginal cost curve is:
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upsloping because of increasing marginal opportunity costs
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Suppose that an economy is producing on its production possibilities curve but is not producing quantities of each good where the marginal benefit equals the marginal cost for each good. This economy:
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can improve its allocation by producing more of one good and less of the other
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The optimal allocation of resources is found:
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where MB=MC
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Through specialization and international trade, a nation:
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can attain some combination of goods lying outside its production possibilities curve.
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