Economic Decision Making Flashcards, test questions and answers
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Cost Benefit Analysis
Ecological Economics
Economic Decision Making
Gross Domestic Product
Law Of Supply And Demand
CHAPTER 1 | Economics: Foundations and Models – Flashcards 46 terms

Isabel Padilla
46 terms
Preview
CHAPTER 1 | Economics: Foundations and Models – Flashcards
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Economics is the study of all of the following except
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how the prices of goods and services are determined
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Which of the following statements best defines scarcity?
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Scarcity is a situation in wh ich unlimited wants exceed the limited resources available to fulfill those wants.
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When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?
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A market
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In economics, how do rational people behave?
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They decide on an action only if its benefits outweigh its costs.
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Fill in the blank. In economics, optimal decisions are made _____________.
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at the margin
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Which of the following is not among the fundamental economic questions that every society must solve?
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What goods and services will be exchanged?
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What types of economies require that answers be given to the following questions: what goods and services will be produced, how will the goods and services be produced, and who will receive the goods and services produced?
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market economies, centrally planned economies, mixed economies
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In what type of economy does the government decide how economic resources will be allocated?
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a centrally planned economy
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Which of the following is the best classification for the economies of the United States, Canada, Japan, and Western Europe?
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mixed economies
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Which of the following terms best refers to a fair distribution of economic benefits?
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equity
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Which of the following is achieved when a good or service is produced up to the point where the marginal benefit to consumers is equal to the marginal cost of producing it?
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allocative efficiency
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Which of the following terms summarizes the situation in which a buyer and a seller exchange a product in a market and, as a result, both are made better off by the transaction?
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voluntary exchange
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What does an economy achieve by producing a good or service at the least possible cost?
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productive efficiency
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Which of the following best describes the characteristics of models used in economics?
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Models are simplifications of reality that include only essential elements and exclude less relevant details.
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Which of the following is not an essential component of an economic model?
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normative statements
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What is the purpose of an economic hypothesis?
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to establish a causal relationship
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What type of economic analysis is concerned with the way things ought to be?
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normative analysis
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The statement "A minimum wage actually reduces employment" would be considered what type of statement?
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a positive statement
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Which of the following is an example of a positive question?
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If the college increased tuition, would class sizes decline?
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Which of the following questions can be answered using normative economic reasoning?
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Should a college cut tuition to stimulate enrollments?
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Which of the following involves an estimation of the benefits and costs of a particular action?
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positive analysis
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What type of assessment is one in which a person's values and political views form part of that assessment?
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a normative assessment
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Fill in the blank: ____________is the study of how households and businesses make choices, how they interact in markets, and how the government influences their choices.
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Microeconomics
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Which of the following covers the study of topics such as inflation and unemployment?
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macroeconomics
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What is the name given to the development of a new good or a new process for making a good?
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an invention
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A firm's processes to produce goods and services are called
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technology
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The stock of computers, factory buildings, and machine tools used to produce goods better are known as
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physical capital
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Human capital is
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the accumulated training and skills that workers possess
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Fill in the blanks. The slope of a straight line equals the change in value on the ____________ axis____________ by the change in the value on the other axis between any two points on the line.
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vertical; divided
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Why do economists distinguish between financial capital and physical capital?
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Economists distinguish financial capital and physical capital because only physical capital (for example, machinery, tools, and buildings) is a productive resource. Financial capital includes stocks, bonds, and holdings of money. Financial capital is not part of a country's capital stock, because financial capital does not produce output.
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Explain the difference between productive efficiency and allocative efficiency.
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Productive efficiency is the situation in which a good or service is produced at the lowest possible cost. Allocative efficiency is a state of the economy in which production reflects consumer preferences: every good or service is produced to the point at which the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it.
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TF: Stating a hypothesis in an economic model is an example of normative analysis
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F
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TF: Only poor people face problems related to scarcity
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T
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TF: Economists assume that human beings respond only to monetary incentives.
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F
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TF: In a centrally planned economy, the goods and services produced are always distributed equally to all citizens
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F
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TF:Equity is achieved when economic benefits are equally distributed.
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F
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TF: A mixed economy is an economy in which the three fundamental questions (What? How? Who?) are answered by a mixture of consumers and producers.
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F
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TF: Only centrally planned economies face trade-offs when producing goods and services
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F
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TF: People are rational when they only take actions that benefit society as a whole
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F
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TF: Government intervention in the U.S. economy increased dramatically as a result of the Great Depression.
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T
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TF: Economists use normative analysis to show that the minimum-wage law leads to higher unemployment.
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F
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TF: Microeconomics is the study of how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices.
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T
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TF: The slope of a straight line is the same at any point.
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T
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TF: To measure the slope of a nonlinear curve at a particular point, one must draw a straight line from the origin to the point. The slope of this line is equal to the slope of the curve at that point
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F
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TF: All societies face the economic problem of having a limited amount of economic resources.
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T
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TF: Economic models can help analyze simple real-world economic situations but are of little value in analyzing complicated economic situations.
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F
Economic Decision Making
Ego Defense Mechanisms
Psychology
Biological Psychology Chapter 1 – Flashcards 31 terms

Amber Moore
31 terms
Preview
Biological Psychology Chapter 1 – Flashcards
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biological psychology
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the study of the biological bases of psychological processes and behaviour (also called behavioural neuroscience)
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neuron
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the basic unit of the nerve system
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neuroscience
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the study of the nervous system
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conserved
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in the context of evolution, referring to a trait that is passed on from a common ancestor to two or more descendant species.
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five research perspectives on the biology of behaviour
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1. description: structural and functional 2. evolution 3. development over the life span 4. mechanisms 5. applications
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physiological psychology
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More specific and defined area of biological psychology - Deals with the relationship between mind and body (i - Tends to be invasive (i.e., manipulating directly the nervous or endocrine system of animals) - Focus is on the central nervous system
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psychophysiology
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Tends to take physiological measures, and correlate them with behavioural or cognitive measures. - Focuses on autonomic nervous system measures, brain waves, muscle activity, etc. - Ex: EEG, EMG, EOG, GSR, etc. - Applications: Biofeedback, sleep studies, polygraph
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neuropsychology
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Typically in the human and clinical context ("clinical neuropsychology") - A clinical psychology Ph.D or PsyD is required. - based on assessment of patients (for brain disorders and injuries) and rehabilitation. - Working with neurologists (MD's) is often required in hospitals)
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behavioural neuroscience
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Tends to be defined as "biological psychology" (so quite general) with the exclusion of cognitive neuroscience. - Fundamental (basic) research with both animal models and humans. - Definitions depend on how you define "behaviour" - Focus on observable behaviours (i.e., motor behaviour), and emotions (affective processes) and motivational processes
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ethology
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the science of animal behaviour
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behaviourism
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the theory that human and animal behavior can be explained in terms of conditioning, without appeal to thoughts or feelings, and that psychological disorders are best treated by altering behavior patterns.
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striated muscle
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A type of muscle with a striped appearance, gen- erally under voluntary control. Compare smooth muscle
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cognitive neuroscience
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Fundamental research with predominantly human but some animal models - Heavy reliance on non-invasive neuroimaging techniques (e.g., CAT, PET, fMRI, etc.). - Focuses on cognitive processes (covert processes) and functions (e.g., behavioural plasticity, communication, etc.): Learning and memory, Attention and perception, Problem solving, decision making, Language
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developmental psychology or neuroscience and behaviour genetics
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Study of - life-span development - early development (pre-natal, peri-natal, early post natal) - aging - genetic vs. environmental influences - epigenetics - brain growth and regeneration, neuroplasticity, etc. - In behavioural endocrinology and toxicology: organizational effects of hormones, endocrine disruptors, neuroteratology
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3 emerging areas of neuroscience
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1. Affective neuroscience: The neuroscience of emotions, affect 2. Social neuroscience: The neuroscience of social behaviour and socio-affective processes. 3. Motivational neuroscience: the study of motivational processes. "Drives" and incentives, and how the brain responds to "reward", and becomes addicted
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behavioural pharmacology or psychopharmacology
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The study of the effects of drugs on brain, behaviour, cognition
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behavioural endocrinology and psychoendocrinology
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The study of the effect of hormones on brain and behaviour and also the effect of behaviour on the endocrine system
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behavioural toxicology
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The study of the effect of neurotoxins (and sometimes endocrine disruptors) on brain and behaviour
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neurotoxin
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a poison that acts on the nervous system
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psychoneuroimmunology
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Study of the relationship between the immune system, the nervous system and behaviour
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3 main approaches to studying the neuroscience of behaviour
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1. somatic intervention 2. behavioural intervention 3. both of these variables measured to allow for correlations between somatic and behavioural changes - each approach enriches the others
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somatic intervention
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investigators change the body structure or chemistry of an animal in some way and observe and measure any resulting behavioral effects.
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behavioural intervention
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An approach to finding relations between body variables and behavioural variables that involves intervening in the behaviour of an organism and looking for resultant changes in body structure or function.
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epigenetics
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The study of heritable changes in gene activity that are not caused by changes in the DNA sequence - The study of factors that affect gene expression without making any changes in the nucleotide sequence of the genes themselves.
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monism
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the brain and the mind are the same - also physicalism, materialism
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dualism
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brain and mind are not the same - but could interact (interactionism) - Cartesian dualism
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telencephalon
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The frontal subdivision of the forebrain that includes the cerebral hemispheres when fully developed.
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MacLean's brain theory
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The Triune Brain - telecephalic components: 1. reptilian brain 2. paleo-mammalian brain 3. neo-mammalian brain
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reptilian brain
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basal ganglia and extrapyrimidal motor system
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paleo-mammalian brain
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"visercal" or "ventral" brain - limbic system, social emotions
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neo-mammalian brain
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"dorsal" brain - neocortex, complex cognitions
Behavioral Economics
Diminishing Marginal Utility
Economic Decision Making
Economics
Marginal Utility Per Dollar
Chapter 8 Utility and Demand – Flashcards 12 terms

Steven Colyer
12 terms
Preview
Chapter 8 Utility and Demand – Flashcards
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Budget Line
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The limit to a household's consumption choices. It marks the boundary between those combinations of goods and services that a household can afford to buy and those it cannot afford.
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Preferences
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A description of a person's likes and dislikes and the intensity of those feelings.
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Utility
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The benefit or satisfaction that a person gets from the consumption of goods and services.
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Total Utility
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The total benefit that a person gets from the consumption of all the different goods and services.
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Marginal Utility
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The "change" in total utility resulting from a one-unit increase in the quantity consumed.
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Diminishing Marginal Utility
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The tendency for marginal utility to decrease as the quantity consumed of a good increases.
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Consumer Equlibrium
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A situation in which a consumer has allocated all his or her available income in the way that, given the prices of goods and services, maximizes his or her total utility.
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Marginal Utility per Dollar
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The marginal utility from a good that results from spending one more dollar on it. It is calculated as the marginal utility from the good divided by its price.
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Behavioral Economics
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A study of the ways in which limits on the human brain's ability to compute and implement rational decisions influences economic behavior—both decisions that people make and the consequences of those decisions for the way markets work.
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Neuroeconomics
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The study of the activity of the human brain when a person makes an economic decision.
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The reason why we do not always make rational economic choices/decisions
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Behavior Economics & Neuroeconomics seek to acheive:
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• Bounded Rationality • Bounded Willpower • Bounded Self-interest
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(3) Limitations on Human Rationality:
Economic Decision Making
Fixed Interest Rate
Macroeconomics
Macroeconomics Chapters 6-9 – Flashcards 65 terms

Daniel Jimmerson
65 terms
Preview
Macroeconomics Chapters 6-9 – Flashcards
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Adjustable-rate mortgage (ARM)
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A mortgage (home loan) that adjusts the nominal interest rate to changing rates of inflation.
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Aggregate demand
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The total quantity of output (real GDP) demanded at alternative price levels in a given time period, ceteris paribus.
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Aggregate supply
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The total quantity of output (real GDP) producers are willing and able to supply at alternative price levels in a given time period, ceteris paribus.
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Autonomous consumption
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Consumer spending not dependent on current income.
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Average propensity to consume (APC)
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Total consumption in a given period divided by total disposable income.
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Base year
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The year used for comparative analysis; the basis for indexing price changes.
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Bracket creep
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The movement of taxpayers into higher tax brackets (rates) as nominal incomes grow.
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Business cycle
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Alternating periods of economic growth and contraction.
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Consumer Price Index (CPI)
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A measure (index) of changes in the average price of consumer goods and services.
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Consumption
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Expenditure by consumers on final goods and services.
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Consumption function
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A mathematical relationship indicating the rate of desired consumer spending at various income levels.
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Core inflation rate
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Changes in the CPI, excluding food and energy prices.
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Cost-of-living adjustment (COLA)
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Automatic adjustments of nominal income to the rate of inflation.
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Cyclical unemployment
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Unemployment attributable to a lack of job vacancies—that is, to an inadequate level of aggregate demand.
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Deflation
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A decrease in the average level of prices of goods and services.
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Demand-pull inflation
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An increase in the price level initiated by excessive aggregate demand.
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Discouraged worker
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An individual who isn't actively seeking employment but would look for or accept a job if one were available.
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Disposable income
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After-tax income of households; personal income less personal taxes.
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Dissaving
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Consumption expenditure in excess of disposable income; a negative saving flow.
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Equilibrium (macro)
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The combination of price level and real output that is compatible with both aggregate demand and aggregate supply.
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Equilibrium GDP
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The value of total output (real GDP) produced at macro equilibrium (AS = AD).
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Fiscal policy
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The use of government taxes and spending to alter macroeconomic outcomes.
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Frictional unemployment
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Brief periods of unemployment experienced by people moving between jobs or into the labor market.
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Full employment
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The lowest rate of unemployment compatible with price stability, variously estimated at between 4 percent and 6 percent unemployment.
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Full-employment GDP
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The value of total market output (real GDP) produced at full employment.
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GDP deflator
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A price index that refers to all goods and services included in GDP.
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Growth recession
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A period during which real GDP grows but at a rate below the long-term trend of 3 percent.
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Hyperinflation
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Inflation rate in excess of 200 percent, lasting at least one year.
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Inflation
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An increase in the average level of prices of goods and services.
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Inflation rate
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The annual percentage rate of increase in the average price level.
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Inflationary flashpoint
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The rate of output at which inflationary pressures intensify; the point on the AS curve where slope increases sharply.
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Inflationary GDP gap
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The amount by which equilibrium GDP exceeds full-employment GDP.
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Investment
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Expenditures on (production of) new plants, equipment, and structures (capital) in a given time period, plus changes in business inventories.
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Item weight
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The percentage of total expenditure spent on a specific product; used to compute inflation indexes.
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Labor force
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All persons over age 16 who are either working for pay or actively seeking paid employment.
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Labor force participation rate
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The percentage of the working-age population working or seeking employment.
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Laissez faire
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The doctrine of "leave it alone," of nonintervention by government in the market mechanism.
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Law of demand
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The quantity of a good demanded in a given time period increases as its price falls, ceteris paribus.
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Macroeconomics
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The study of aggregate economic behavior, of the economy as a whole.
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Marginal propensity to consume (MPC)
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The fraction of each additional (marginal) dollar of disposable income spent on consumption; the change in consumption divided by the change in disposable income.
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Marginal propensity to save (MPS)
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The fraction of each additional (marginal) dollar of disposable income not spent on consumption; 1 − MPC.
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Monetary policy
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The use of money and credit controls to influence macroeconomic outcomes.
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Money illusion
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The use of nominal dollars rather than real dollars to gauge changes in one's income or wealth.
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Natural rate of unemployment
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The long-term rate of unemployment determined by structural forces in labor and product markets.
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Nominal GDP
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The value of final output produced in a given period, measured in the prices of that period (current prices).
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Nominal income
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The amount of money income received in a given time period, measured in current dollars.
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Okun's Law
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One percent more unemployment is estimated to equal 2 percent less output.
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Outsourcing
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The relocation of production to foreign countries.
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Price stability
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The absence of significant changes in the average price level; officially defined as a rate of inflation of less than 3 percent.
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Production possibilities
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The alternative combinations of final goods and services that could be produced in a given period with all available resources and technology.
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Real GDP
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The value of final output produced in a given period, adjusted for changing prices.
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Real income
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Income in constant dollars; nominal income adjusted for inflation.
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Real interest rate
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The nominal interest rate minus the anticipated inflation rate.
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Recession
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A decline in total output (real GDP) for two or more consecutive quarters.
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Recessionary GDP gap
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The amount by which aggregate spending at full employment falls short of full-employment output.
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Relative price
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The price of one good in comparison with the price of other goods.
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Saving
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That part of disposable income not spent on current consumption; disposable income less consumption.
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Say's Law
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Supply creates its own demand.
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Seasonal unemployment
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Unemployment due to seasonal changes in employment or labor supply.
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Structural unemployment
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Unemployment caused by a mismatch between the skills (or location) of job seekers and the requirements (or location) of available jobs.
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Supply-side policy
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The use of tax incentives, (de) regulation, and other mechanisms to increase the ability and willingness to produce goods and services.
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Underemployment
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People seeking full-time paid employment that work only part-time or are employed at jobs below their capability.
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Unemployment
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The inability of labor force participants to find jobs.
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Unemployment rate
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The proportion of the labor force that is unemployed.
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Wealth effect
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A change in consumer spending caused by a change in the value of owned assets.
Applied Economics
Economic Decision Making
Producing Goods And Services
Three Basic Economic Questions
FBLA Economics Test 1 – Flashcards 100 terms

Brenda Gannon
100 terms
Preview
FBLA Economics Test 1 – Flashcards
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A need is something that you desire to have because someone else has one.
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False
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One of the problems in economics is that wants are unlimited.
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True
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There are only two kinds of economic resources: human and capital.
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False
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Labor is another name for human resources.
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True
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Some resources, such as clean air and water, are limited.
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True
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Scarcity is a problem that is faced by individuals and businesses but not by governments.
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False
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Economic decision making is important to businesses and governments but not to individuals.
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False
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Economic decision making is a process requiring four important steps.
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False
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An arrangement that allows buyers and sellers to come together to trade goods, services, and resources is called a market.
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True
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Determining which of its citizens should benefit from the production of goods and services something each nation must decide.
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True
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When the government hires new employees, it is participating in the marketplace.
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True
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In a system of capitalism, the government decides what will be produced with the resources available.
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False
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In the private enterprise system, you may start or invest in any business as long as it is not illegal to do so.
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True
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The profit motive is designed to allow lazy owners to become rich.
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False
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The three roles that everyone must perform are worker, consumer, and saver.
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False
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Quantity demanded means the quantity of products and services that consumers are willing and able to buy at a particular price.
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True
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Quantity supplied means the quantity of a product or service that businesses are willing and able to provide at a particular price.
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True
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Success in your role as a worker will affect your standard of living.
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True
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When you pay your taxes, you are performing your citizen role.
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True
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Economic growth refers to a steady increase in the production of goods and services in an economics system.
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True
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There are over 120 million workers in the U.S. economy.
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True
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The GDP in our economy has declined steadily for the past few years.
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False
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Changes in the business cycle form a pattern of good times to bad times and back.
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True
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Recovery in the business cycle occurs after a period of inflation.
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False
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The production process of getting goods to consumers usually requires only one business.
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False
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A supermarket, a bank, and a utility company are all examples of businesses.
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True
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Marketing involves just transporting and selling products.
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False
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Marketing activities add value to a product.
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True
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Building a specific, unique product for one customer is called processing.
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False
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Mass production is not the standard of U.S. manufacturing.
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False
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Service businesses are the fastest growing part of our economy.
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True
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All businesses must raise capital, use human resources, and keep records.
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True
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One of the eight marketing functions is risk management.
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True
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Consumers often have a negative or narrow view of marketing.
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True
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The marketing strategy is a two-step process.
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True
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Buying motives can be rational or emotional.
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True
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A wholesaler sells directly to consumers.
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False
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If a company has a limited supply of a product, it may lower its price.
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False
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Effective personal selling includes contact with the customer after the purchase.
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True
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Another term for international business is foreign or world trade.
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True
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among the advantages enjoyed by the U.S. in world trade is our own production of wool and oil.
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False
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It is necessary for the U.S. to import a variety of metals.
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True
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There are a number of challenges involved with international trade, but currency exchange rates are not one of them.
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False
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A limit set on the quantity of a product that can be imported or exported is called an embargo.
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False
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A balance of payments and a balance of trade are the same thing.
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False
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A business budget anticipates sources and amounts of income.
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True
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Expenses include the total revenue minus operating costs of the small business.
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False
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The most important step in financial planning is developing an income statement.
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False
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In a small business, the budgeting goals are much the same as in a household-- to determine what the sources of income are and how they will be distributed.
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True
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Budgets identify the financial plans of a business.
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True
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Which of the following is NOT a need? •food •housing •car •clothing
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car
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Members of a family might not be able to afford the things they want because of an economic factor called ________.
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the basic economic problem
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What step is defining the problem in the decision-making process?
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first
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A weekend skiing trip, a summer home at the lake, and a new 32-inch stereo television are all examples of ______.
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wants
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Which of the following is NOT one of the three key economic questions? •What goods and services should be produced? •For whom should goods and services be produced? •When should the production of goods and services take place? •How should goods and services be produced?
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When should the production of goods and services take place?
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Which of the following are characteristics of capitalism? •Economic resources are privately owned. •Individuals are free to decide what to produce. •Decisions about production and distribution are made through voluntary exchange.
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All
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Which of the following is the best definition of profit? •the money a business takes from its sale •the money left from sales after expenses have been paid •an operational device that makes business owners rich •what is left after all merchandise has been sold
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the money left from sales after expenses have been paid
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The "new rights" in previously controlled economies include ______.
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•the right to earn a fair profit, •the right to do business with minimal government regulation •the right to fail
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A weekend skiing trip, a summer home at the lake, and a new 32-inch stereo television are all examples of _______.
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wants
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Some of our wants are satisfied through the efforts of other people. These are called ______.
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services
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You must make a choice. Either go to the concert or buy the group's new CD. If you buy the CD, you will miss going to the concert with your friends but you will have the music to pay whenever you want. In the decision-making process, you are ______.
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evaluating the advantages and disadvantages of each choice
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The employees who work in an automobile assembly plant are that company's _____.
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human resources
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Which of the following is NOT one of the economic roles performed in our economy? •worker •citizen •leader •consumer
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leader
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What is the effect of dollar votes by consumers?
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•demand is affected •businesses learn about consumer preferences •businesses are helped in making decisions
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Which of the following is NOT true about prices? •If prices are too high, consumers won't buy. •If prices are too low, businesses will not earn a profit. •Prices are affected by both supply and demand. •Setting a price does not require any study by a business.
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Setting a price does not require any study by a business.
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The factor that helps to keep prices at a reasonable level is ____
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Competition among businesses
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Which of the following is true about your citizen role? •voting is not part of it •keeping informed is not important •decisions made are individual and not collective •it helps provide goods and services needed by the community
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It helps provide goods and services needed by the community
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Collective decision making means that _____
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citizens as a group influence community decisions
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The quantity of a good or service that businesses are willing and able to sell at a particular price is called _____
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quantity supplied
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Which of the following would NOT be counted in computing GDP? •building a do-it-yourself picnic table for your own yard •hamburgers you flip on your job at a fast-food restaurant •a pair of socks you sell on your job at a department store
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building a do-it-yourself picnic table for your own yard
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When the effect of price changes is taken out of GDP, we have ______
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real GDP
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Which of the following is true about the business cycle? •it has four phases •there are recurring ups and owns •there is a pattern of good times to bad times and back again
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all
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Prosperity is the condition when _____
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the business cycle is at its high point
question
The future of our economy is characterized by _____
answer
serious problems that must be faced
question
This is when citizens decide how public goods will be provided for their common use.
answer
collective decision making
question
The quantity of a good that an average worker can produce in an hour is know as _____
answer
labor productivity
question
The business that takes raw materials and turns them into some usable form is known as
answer
a manufacturer
question
A firm that creates a product to meet a customer's specifications engages in _____
answer
custom manufacturing
question
Changing something from one form to another so it can be consumed or used to make something else is known as ____
answer
processing
question
Getting the product from the producer into the hands of the consumer is just one function of ____
answer
marketing
question
Understanding labor laws, hiring employees, and training staff are all functions of ____
answer
human resources
question
The eight marketing functions do NOT include ______
answer
manufacturing
question
Anything offered to the target market to satisfy their needs is
answer
the product
question
Maximizing profits, increasing sales, and maintaining an image are objectives related to _____
answer
pricing
question
Which of the following is the set of activities that ensures a smooth exchange relationship between businesses and consumers?
answer
marketing
question
When we develop a product or service with a specific group of customers in mind, we are considering the
answer
target market
question
The path that a product follows when moving from producer to consumer is called
answer
channel of distribution
question
Reinforcing the purchase decision, or simply reminding customers that they have made the right choice, is a function of ____
answer
Promotion
question
Which of the following is used to completely stop the import or export of a product? •embargo •tariff •duty •tax
answer
embargo
question
Which of the following are barriers to international trade? •quotas •tariff •duty •tax
answer
all
question
If you own your own small business, the money you receive is called
answer
revenue
question
A budget that estimates income and expenses from the beginning of the business until it becomes profitable is called a
answer
start-up budget
question
A balance sheet lists
answer
assets and liabilities
question
When expenses are greater than income, the result is
answer
a net loss
question
What statements do business owners review to determine how their businesses are performing?
answer
financial statements
question
Which of the following restaurants would be opened as a result of ethnic cultural diversity in the United States? •Burgers R' Us •Dan's Dogs and Sandwiches •Wang's Chinese Restaurant •May Lou's Soup and Sandwich Shop
answer
Wang's Chinese Restaurant
question
Financial information on similar businesses and industries are available in
answer
•Forbes •Fortune •The Wall Street Journal
question
What are the two most used financial statements?
answer
Balance sheet and income statement
question
Which of the following would show the wages of the company employees? •credit accounts •inventory •payroll •assets
answer
payroll
question
If Rick Adamson's business income was $85,900, and his expenses were $48,100, how much would his net profit be?
answer
$37,800
Basic Economic Questions
Consumer Protection Laws
Economic Decision Making
Economics
Next Best Thing
Producing Goods And Services
Economics Unit 1 – Flashcards 69 terms

Martha Hill
69 terms
Preview
Economics Unit 1 – Flashcards
question
-is a social science -focuses on decision making -involves consumers and producers
answer
Select the items below that describe the field of economics. Economics: Is a social science Is a plan to buy everything Focuses on decision making Involves consumers and producers
question
needs
answer
water and food are examples of _____.
question
wants
answer
extra pairs of shoes and music downloads are examples of _____.
question
-going to the doctor -getting a haircut -mowing the lawn
answer
Select the items below that are kinds of services. Going to the doctor Getting a haircut Mowing the lawn Owning a house
question
good.
answer
Susan bought a new computer. She purchased a _____.
question
consumers.
answer
people who buy goods and services are part of a group of decision makers called ______.
question
-companies -governments -nonprofit organizations
answer
Select the items that name types of producers. Buyers Companies Governments Nonprofit organizations
question
governments
answer
public education and roads are produced by ________.
question
(2) what is gained when a decision is made (1) in-depth study (4) to receive the most from something (3) what is given up when a decision is made.
answer
Match the term with the appropriate definition. 1. analysis 2. benefit 3. cost 4. maximize
question
-receiving the most satisfaction from a decision. -working within given conditions.
answer
Select the two parts of rational behavior. Doing whatever a person wants Receiving the most satisfaction from a decision Working within given conditions Not analyzing decision options
question
-the price of the cell phone -the amount of money Ben has to spend
answer
Ben wants to buy a new cell phone. Select the conditions that Ben should consider for this buying decision. The price of the cell phone Ben's age The number of sisters and brothers Ben has The amount of money Ben has to spend
question
to make a decision using a rational approach
answer
a cost-benefit analysis is a way _______.
question
all
answer
Select the steps for a cost-benefit analysis. List the costs involved in making a decision. Compare the costs and benefits. List the benefits involved in making a decision. Make a decision based on maximizing satisfaction.
question
(2) quantity and quality of human effort to achieve a goal (3) factors from the environment used to achieve a goal (1) products made to make other products and services (4) factors used to achieve a goal.
answer
Match the term with the appropriate definition. 1. capital goods 2. human resources 3. natural resources 4. productive resources
question
renewable resources.
answer
Trees and sunlight are examples of ________.
question
Gas is a nonrenewable resource.
answer
Sergio likes to drive and thinks that gas will be around forever. What is the problem with Sergio's thinking?
question
-natural resources -human resources -capital goods
answer
People design computers, and machines assemble them. Gas is then used to transport the finished computers to stores. Select the factors used in producing computers. Health Natural resources Human resources Capital goods
question
-limited amounts -include fossil fuels (e.g., coal) and minerals (e.g., gold) -come from earth
answer
Select the items that describe nonrenewable resources. Limited amounts Last forever Include fossil fuels (e.g., coal) and minerals (e.g., gold) Come from Earth
question
consumer-driven
answer
America has primarily ______ ______ aggregate economical behavior.
question
food
answer
An example of a physiological need is ______.
question
scarce
answer
resources that will eventually run out are ______.
question
unlimited.
answer
scarcity exists because resources are limited, but people's wants are ______.
question
-businesses can only make a limited number of goods and services. -not everyone's needs are met. -using scarce resource today means having fewer tomorrow.
answer
Select all that apply. Which of the following describe the effects of scarcity? Businesses can only make a limited number of goods and services. People have limited wants. Not everyone's needs are met. Using scarce resources today means having fewer tomorrow.
question
conserve
answer
to have more resources in the future, we must _______ resources today.
question
distribution
answer
You had fifty gallons of water and decided to use twenty-five gallons for showering, brushing your teeth, and flushing the toilet. You also decided to use the rest for cleaning dishes and washing your car. This division refers to your water _____ .
question
all
answer
Select all that apply. Which of the following items determine your preference for a concert ticket? band that is playing date of the concert price of the ticket friends that are going
question
reward
answer
a positive incentive that makes people better off is a ______.
question
not doing the action often.
answer
receiving a penalty from an action will most likely result in ______.
question
retail price
answer
Charlotte paid $4 for a movie download. The monetary amount is the download's ______.
question
trade-offs
answer
Ben was considering spending his gift card on books, music downloads, or movie tickets. He chose the movie tickets. Any values given up from not choosing the books and music downloads are called _____ .
question
opportunity cost
answer
Any value given up from the best alternative is called the _____ .
question
-depend on the individual -affect how people behave -help to determine the choices of an individual
answer
Select all that apply. Select all the items that describe incentives. depend on the individual affect how people behave are not part of the decision process help to determine the choices of an individual
question
utility
answer
An economic term that describes happiness and is hard to measure in numbers is _____ .
question
accounting cost
answer
The cost of producing a good and getting it to the customers is called
question
endorsements
answer
Beyonce, Taylor Swift, and Miley Cyrus make commercials that encourage people to drink milk. These ads contain _____ .
question
individual preferences
answer
George and Martha both have the choice to go to the movies. George decides to go, while Martha decides to stay home. The example illustrates _____ .
question
saver
answer
Steven puts aside some of his money for future use. He is a ______.
question
non-monetary incentive
answer
You studied for an exam and received an "A." The "A" is an example of a _____ .
question
alternatives
answer
Joyce is thinking about spending Saturday night at the movies, although she has many other choices for how to spend her Saturday night. Her choices represent her _____ .
question
private property
answer
________ is an incentive in conserving both renewable and non-renewable resources.
question
-The civil War was about Northern businessmen trying to bankrupt Southern farmers by emancipating their enslaved workforce. -England developed a fair and just taxation system for the American Colonies
answer
Select all that apply. Identify the fallacious arguments. The Great Depression brought prosperity to a few and great poverty to the many. The Civil War was about Northern businessmen trying to bankrupt Southern farmers by emancipating their enslaved workforce. The Civil Rights movement in America brought much needed recognition to the rampant discrimination throughout America. England developed a fair and just taxation system for the American Colonies. The U.S. involvement in the Vietnam War was a rousing success.
question
-help countries respond to the issue of scarcity -answer the three key economic questions.
answer
Select all that apply. What do economic systems seek to do? provide basic care to citizens help countries respond to the issue of scarcity protect industry from competition answer the three key economic questions
question
entrepreneur
answer
You own a restaurant and are responsible for organizing your business's productive resources. You are a(n) _____
question
trade-off
answer
A company can use its resources to make shirts, towels, or sheets. It chooses to make shirts. Any value given up from not choosing to make the towels or sheets is the _____ .
question
is limited
answer
Your company needs to fix some of the machines in its factory. It also needs to buy more materials. But the company has to choose between these options, because money _____ .
question
expected
answer
Choices are really about trading off the__________ value of one option against the alternatives
question
productive resources can be used in different ways.
answer
The government uses its resources to provide different public goods. This shows that _____ .
question
unintended consequences
answer
Sometimes, things happen that offset the initial effect of a decision. These things are kinds of _____ .
question
marginal benefit
answer
The extra amount of satisfaction that you receive from an additional slice of pizza is part of the _____ .
question
marginal cost
answer
A business calculated that the expense to produce an additional unit of its product is $10. This amount is the
question
marginal utility
answer
The additional unit of happiness that you receive from a decision is called the _____ .
question
decreases
answer
The law of diminishing marginal utility says that as you consume more of something, the satisfaction that you get from each additional unit _____ .
question
not producing the extra car.
answer
Employees from Bob's Car Factory figured out that making another car would cost $25,000. The business also sells each car for $20,000. The company is better off _____ .
question
decide which one is greater.
answer
Jackie is doing a marginal analysis to decide if she should spend any more money on a movie download. After figuring out her marginal cost and marginal benefit, she will _____ .
question
spillover
answer
externalities are ________ effects
question
cannot satisfy everyone's wants
answer
Distribution systems _____ .
question
force
answer
Sue-Ellen took Charlie's cell phone without his permission because she wanted it. This is an example of distribution by _____ .
question
personal characteristics
answer
Kevin is selected to receive a free meal because he is the tallest person in the restaurant. This meal was distributed by using the _________ method.
question
sharing
answer
Rose brought in cupcakes for her birthday and gave one to each person in the class. This is an example of the ___________ distribution method.
question
price
answer
Free market economies offer distribution methods for goods and services based on _____ .
question
in a different way
answer
Free market economies distribute goods and services __________ than command economies.
question
-limited freedom for consumers -inefficient use of productive resources -usually not much economic growth
answer
Select all that apply. Select all the items that describe command economies. limited freedom for consumers inefficient use of productive resources usually not much economic growth encourages competition between businesses
question
-profit -a skilled and happy workforce -seeing an idea come into being
answer
Select all that apply. A primary incentive for entrepreneurs is _____. profit a skilled and happy workforce notoriety seeing an idea come into being paying taxes
question
(1) distribute (7) objects that can satisfy people's needs or wants (3) person whose needs and wants are satisfied by using goods and services (5) social science that focuses on decision-making (2) what is gained when decision is made (6) someone who organizes productive resources to make goods and services (4) what is given up when a decision is made.
answer
Match these items. Match the items in the left column to the items in the right column. 1. allocate 2. benefit 3. consumer 4. cost 5. economics 6. entrepreneur 7. good
question
all
answer
Select all that apply. Select all the items that can be used to make goods and services. renewable resources nonrenewable resources human resources capital goods
question
less of the action
answer
Receiving a penalty from an action will most likely result in doing _____ .
question
the marginal benefit is greater than the marginal cost
answer
You are better off consuming or producing an additional good or service if _____ .
question
non-market distribution methods
answer
Majority rule, first-come/first-served, and sharing equally are examples of _____ .
question
price
answer
Free-market economies allocate resources and distribute goods and services mostly based on _____ .
AP Economics
Economic Decision Making
Economics
Econ – Flashcard 123 terms

Charlotte Small
123 terms
Preview
Econ – Flashcard
question
normative economics is
answer
the application of value theory to economics
question
the basic assumptions in all economic models are all of the following except
answer
good choices are free of opportunity cost
question
according to plato, the origin of the city is to be found in
answer
the need of people to join together and engage in commerce
question
according to the text, historically the structure of society is based on who is in control:
answer
the producers or the confiscators
question
the empirical views of Aristotle:
answer
rejected the theory of the forms; were rejected when they were first brought before the catholic church; provided a natural way of dealing with the day to day challenges of life; all of the above
question
classical liberalism is the school of philosophy that states
answer
individuals are endowed with freedom rather than nobility being endowed with authority
question
mercantilism is a
answer
rationalist based economic system; economic system that promotes greater exports than imports; economic system that calls for government interventions; all of the above
question
producers will prefer a legal system that is based on
answer
personal and economic freedom
question
for us to have all the advantages that the capitalist system provides, there must be
answer
private property rights
question
the invisible hand works to promote the general welfare through
answer
the self interest of producers in the society
question
among the fundamental concepts in economics are
answer
efficient markets; marginalism; opportunity cost; all of the above
question
the study of economics
answer
is a way of analyzing decision making processes caused by scarcity
question
suppose that you purchased a ticket to a jazz festival for 100 a month ago. last week someone invited you to a hockey game on the same night as the jazz festival. you would much rather go to the hockey game than the jazz festival. you have tried unsuccessfully to sell the jazz festival ticket. which of the following statements regarding this situation is c correct?
answer
the 100 you paid for the jazz festival ticket should be irrelevant in your decision making, because it is a sunk cost.
question
the reason that opportunity costs arise is that
answer
resources are scarce
question
if you own a building and you decide to use that building to open a book store
answer
there is an opportunity cost of using this building for a book store because it could have been used in other ways.
question
capital, as economists use the term,
answer
refers to things that have already been produced that are in turn used to produce other goods and services
question
when two people trade
answer
they both expect to be made better off by the exchange
question
someone has a comparative advantage in producing a good if they can produce that good
answer
at a lower opportunity cost
question
the law of demand is
answer
as price goes up, demand goes down
question
at equilibrium two things are equal
answer
quantity demanded and quantity supplied
question
consumer surplus is the
answer
area above the price line and below the demand curve
question
if they demand curve shifts to the right
answer
equilibrium quantity and price will increase
question
if a good is a normal good, and increase in consumer income will cause
answer
an increase in price
question
rich nations will trade with poor nationals only when
answer
each has a comparative advantage in the good being exported
question
two things are true about equilibrium
answer
quantity demanded equals quantity supplied, and there is a tendency to move towards that point
question
if price is above the equilibrium level in a free market
answer
then price will fall
question
what could cause is to redraw the demand curve for pizza
answer
a change in consumer income
question
when quantity supplied is greater than quantity demanded in a free market
answer
price will go down to eliminate the surplus
question
which of the following is held constant along the demand curve
answer
income
question
which of the following will not cause a shift in the demand curve for compact discs
answer
a change in the price of compact discs
question
during an economic downturn when consumer income falls, the demand for tacos increases and the demand for sushi decreases this implies that tacos
answer
are inferior goods and sushi is a normal good
question
demand for one item goes down when the price of another item goes up these items must be
answer
complements
question
a change in income, preferences, or prices of other goods or services leads to a ___ that causes a ___
answer
change in demand; shift of the demand curve
question
if the market for tires is unregulated and is presently characterized by excess supply, you can accurately predict that price will
answer
decrease, the quantity demanded will rise, and the quantity supplied will fall
question
if improvements in technology have reduced the cost of producing personal computers, you accurately predict that in the market for personal computers, there will be a
answer
increase in the supply of personal computers, a decrease in the price, and an increase in the quantity demanded.
question
if exchange rates are set by the forces of supply and demand, then
answer
they are called floating exchange rates
question
in the market for the US dollar, an increase in interest rates within the UW will cause
answer
the value of the US dollar to increase when compared to other currencies
question
in the market for the US dollar, increase in prices within the US (i.e. inflation) will cause
answer
demand for the US dollar to decline in international exchange markets supply to increase in international exchange markets; value to decrease comparatively
question
in a free economy, allocative efficiency is achieved through
answer
markets
question
the price system
answer
automatically distributes scarce goods
question
attempts to bypass rationing in the market
answer
are costly and always fail
question
if the government imposes a maximum price that is above the equilibrium price
answer
this maximum price will have no economic impact
question
people scalping tickets for a jazz festival will be successful at selling the tickets for a profit
answer
when the prices set by the festival organizers is less than the market equilibrium price
question
if the market of coffee is 3 per pound but the government will not allow coffee growers to charge more than 2 per pound of coffee, which of the following will happen
answer
there will be a shortage of coffee
question
the adjustment of ____ is the rationing mechanism in market economies
answer
price
question
a price floor is
answer
a minimum price set by the government that sellers must charge for a good
question
producer surplus is
answer
the difference between current market price and full costs of production for the firm
question
if a household's income doubles, its budget constraint will
answer
shift out parallel to the old one
question
richard is consuming X and Y so that he is spending his entire income and MUx/Px=6 and MUy/Py=10. To maximize utility he should
answer
consume less x and more y
question
if MUx/Px<MUy/Py, then
answer
spending a dollar less on x and a dollar more on y increases utility
question
the marginal utility of the first cup of coffee that tom brinks in the morning is worth 2. the marginal utility of the 9th cut of coffee he drinks is positive while the marginal utility of the 10th cup of coffee he drinks in the morning is worth 0. This implies that at a price of 0, Tom would drink
answer
at most 10 cups of coffee per morning
question
we can state the utility maximizing rule in words in the following way: a personal maximizes utility when she equalizes the __________ across products
answer
marginal utility per dollar spent
question
the law of demising marginal utility implies that
answer
demand curves always slope downward and to the right
question
for normal goods, the substitution and income effects of a price decrease will
answer
both increase the quantity of the food demanded
question
for inferior goods, the substitution and income effects of a price increase will
answer
the substitution effect will decrease the quantity of the good demanded while the income effect will increase the quantity of the good demanded
question
a rise in the price of pepsi that causes a household to shift its purchasing pattern toward coke and away form pepsi is the ___ effect of a price change
answer
substituion
question
in the substitution effect of a wage change outweighs the income effect of a wage change, the labor supply curve is
answer
upward sloping
question
assuming that leisure is a normal good, if an individuals labor supply curve is backward bending, then the
answer
income effect outweighs the substitution effect at higher wages
question
Sponsors invest 100,000 in a new deli on the promise that they will earn a return of 10% per year on their investment. The deli sells 52,000 sandwiches per year. The deli's fixed costs include the return to investors and 42,000 in other fixed costs/ Variable costs consist of wages (1000 per week) plus materials etc (2000 per week). The deli is popen 52 weeks per year. What must the average price per sandwich be for the deli to earn a normal return? suppose the average price per sandwich is 5/50. What is the annual profit of the deli?
answer
$4; $78,000
question
you are hired as an economic consultant to the pampered pet shop. they operate in a perfectly competitive industry. This firm is currently producing at a point where market price equals its marginal cost. The market price is less than its average variable cost. You should advise the firm to
answer
cease production immediately because it is not covering its variable costs of production.
question
if the price of an input increases, each individual firms marginal cost curve shifts ___ and the industry supply curve ___
answer
up; shifts to the left
question
in the short run average costs eventually increase because of ___ and in the long run average costs eventually increase because of ____
answer
diminishing returns; diseconomies of scale
question
engineers for the figgen record company have determined that a 35% increase in all compact disc inputs will cause a 45% increase in output. Assuming that input prices remain constant, you correctly deduce that such a change will cause ___ as output increases.
answer
average costs to decrease
question
when an increase in the scale of production leads to higher average cost, the industry exhibits
answer
decreasing returns to scale
question
suppose heidis ice cream experiences economies of scape up to a certain point and diseconomies of scale beyond that point. its long run average cost curve is most like to be
answer
U shaped
question
assume the peanut industry, a perfectly competitive industry, is in long run equilibrium with a market price of $5. If demand for peanuts increases and this industry is a decreasing cost industry, long run equilibrium will be reestablished at a price
answer
less than $5
question
assume a perfectly competitive industry is in long run equilibrium at a price of $20. If this industry is a constant cost industry and the demand for the product decreases, long run equilibrium will be reestablished at
answer
$20
question
factors of production that can be used together to enhance the others productivity are
answer
complementary inputs
question
Tonys lawn service uses only one variable input, fertilizer. The firms demand curve for fertilizer in the short run is the inputs
answer
total product curve
question
the demand for any factor of production in a competitive industry depends on
answer
its productivity and upon the value of its output in the marketplace
question
a wheat farmer sells wheat in a perfectly competitive market and hires la bor in a perfectly competitive market. the market price of wheat is 2 a bushel, the wage rate is 10, the farmer employs fie works and the marginal product of the fifth worker is 3 bushes. what would you advise this farmer to do?
answer
reduce employment because the wage [aid is more than the marginal revenue product.
question
the marginal revenue product curve of labor will always shift to the right if
answer
product demand increases and product price increases
question
when a firm substitutes away from a factor whose price has risen and toward a factor whose price has fallen it is an example of the
answer
factor substitution effect
question
a profit maximizing firm will continue to employ land until
answer
MRPland=Pland
question
assume the backwoods shoe company hires three inputs: labor (l) capital (k and land (a) to produce shoes (x). which of the following conditions must be met so that the firm is using the optimal, or least costly combination of inputs.
answer
MPL=MPL=MPA=1/PX
question
a firm is currently hiring capital and labor so that MPL/PL<MPK/PK
answer
less labor and more capital
question
if economic profit is zero, a firm
answer
earns exactly a normal rate of return
question
you are the owner and only employee of a company that sets odds for sporting events. Last year you earned a total revenue of 100,000. Your costs for rent and supplies were 50,000. To start this business you invested an amount of your own capital that could pay you a return of 20,000 a year. Your accounting profit last year was? Your economic profit last year was?
answer
50,000 30,000
question
the optimal method of production is the one that
answer
minimizes cost
question
a firm produces 5 units of output from the last dollar it spends on labor and 10 units from the last dollar spent on capital. The firm should
answer
employ more capital and less labor
question
you are certain that a normal rate of return is 18% for the computer industry. What do you expect for a normal rate of return in the computer software industry, which is considered to be much riskier than the computer industry?
answer
above 18%
question
dana spend 10,000 on remodeling a storefront that she then opens as a shoe store. The business has not been very successful and she needs an additional 3,000 to keep the shoe store open. Which of the following is true?
answer
the 10,000 dana spent on remodeling is a fixed cost of her business
question
marginal cost
answer
is the increase in total cost resulting from producing one more unit
question
diminishing marginal returns implies
answer
increasing marginal costs
question
total variable costs
answer
always increase with output
question
in the short run where total variable cost is ___ at an ___ rate, marginal cost is positive and increasing
answer
increasing; increasing
question
if the marginal cost curve is below the average variable cost curve, then
answer
average variable costs are decreasing
question
the law of diminishing marginal returns
answer
results in average variable cost (AVC), average total cost (ATC), and marginal cost (MC) curves eventually increasing at an increasing rate.
question
marginal revenue for a perfectly competitive firms is
answer
horizontal
question
profit maximizing firms want to maximize the difference between
answer
total revenue and total cost
question
imperfect competition
answer
results in less efficient market outcomes
question
monopolies, oligopolies, and monopolistic competitive industries all
answer
have market power
question
a monopoly is an industry with
answer
a single firm in which the entry of new firms is blocked
question
market power refers to a firms ability to
answer
raise price without losing all sales of its product
question
for a monopolist to sell more units of output
answer
the price must be reduced
question
an important distinction between perfect competition and monopoly is that in
answer
monopoly the firm faces the market demand curve
question
relative to a monopolized industry, a competitively organized industry is more likely to produce
answer
more output, charges lower pries, and earns only a normal profit
question
although patents are a ___, the also provide___
answer
barrier to entry; an incentive for invention and innovation
question
suppose we know that a monopolist is maximizing its profits. Which of the following is a correct inference? The monopolist has
answer
equated marginal revenue and marginal cost
question
the XYZ computer company has a monopoly over the production of a specialized color printer. the XYZ computer company will find it profitable to increase the production of specialized color printers as long as marginal cost
answer
is less than marginal revenue
question
because of a patent, Alcoa is the only manufacturer of soda cans with a stay put tab. Alcoa can earn a profit on the sale of soda cans with stay put tabs
answer
in the long run because entry into the industry by new firms is blocked until the patent expires
question
the Sherman antitrust act of 1890
answer
made illegal every conspiracy in restraint of trade or commerce among the several states.
question
the biggest problem with the Sherman antitrust act of 1890 was that it was unclear what
answer
specific acts were to be considered "restraints of trade"
question
the criterion introduced by the supreme court in 1911 to determine whether a particular action was illegal or legal within the terms of the Sherman act is called the
answer
rule of reason
question
a form of industry structure characterized by a few firms each large enough to influence market price is
answer
oligopoly
question
oligopoli is difficult to analyze because
answer
of the complex interdependence that usually exists among oligpolistic firms
question
according to the five forces model, ____ are the five competitive forces that determine the level of competition and profitability in an industry.
answer
rivals, buyers, suppliers, substitutes, and potential entrants
question
the oligopolistic model in which firms produce exactly the same results as would exist if a monopolist controlled the entire industry is called the
answer
collusive cartel model
question
assume that firms in an oligopoly are currently colluding to set price and output to maximize total industry profit. If the government forces the oligopolists to stop colluding, the price charged by the oligopolies will ___ and the total output produced will ___
answer
decrease; increase
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in the Cournot model the final level of output falls between the output that would prevail if the market were ___ and out output that would be set by a ___
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competitive; monopoly
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a form of oligopoly in which a dominant firm sets the price and all the smaller firms in the industry follow the dominant firm's pricing policy is called
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the price leadership model
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the herfindahl-hirschman index is
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calculated by summing the squared market share percentages for all firms in the industry
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if the herfindahl-hirschman index of an industry is less than 1,000, then the antitrust decision of the justice department
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considers the industry unconcentrated
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economists no longer attack industry concentration with the same fervor they once did because
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the theory of contestable markets shows that even firms in highly concentrated industries can be pushed to produce efficiently under certain market circumstances.
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there is easy entry into the ___ and ___ industries
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perfectly competitive; monopolistically competitive
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monopolistic competition differs from perfect competition primarily because in
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monopolistic competition, firms can differentiate their products
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in monopolistic competition firms can have some market power
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by producing differentiated products
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the case for advertising includes the fact that
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it produces consumers with valuable information about product availability, quality, and price.
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the case against advertising includes that fact that
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firms spend large sums of money to create artificial differences among products
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critics of advertising contend all of the following except
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advertising can easily turn into productive competition that increases welfare
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the pizza delivery industry is monopolistically competitive. Little Joe's pizzeria raises its prices by 10% but all the other pizzerias in town keep their prices the same. Which of the following is most likely to occur.
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Little Joe's pizzeria will lose some if its customers
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a monopolistically competitive firm produces where
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marginal revenue equals marginal cost
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if firms in a monopolistically competitive industry are earning economic profits, then in the long run
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new firms producing close substitutes will enter the industry and this entry will continue until economic profits are eliminated
Australia
Circular Flow Diagram
Cost Per Unit
Economic Decision Making
Economic Systems
Goods And Services
New And Improved
AP Economics Unit 1, Chapter 2: The Market System and Circular Flow – Flashcards 22 terms

Michael Seabolt
22 terms
Preview
AP Economics Unit 1, Chapter 2: The Market System and Circular Flow – Flashcards
question
economic system
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a particular set of institutional arrangements and a coordinating mechanism to respond to the economizing problem
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command system
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a type of economic system in which the government owns most property resources, such as corporations, and economic decision making occurs through a central economic plan, with the division of output between capital and consumer goods centrally decided
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market system
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a type of economic system of private ownership of resources and the use of individualized self-interest to achieve individualized economic goals through work, competition, consumption, and production; economic decision making is widely dispersed and economic goals allow for entrepreneurs to flourish
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private property
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the private individuals and firms that own most of the property resources, encouraging investment, innovation, and economic growth
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freedom of enterprise
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the freedom of entrepreneurs and businesses to freely obtain and use economic resources to produce goods and sell them in chosen markets
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freedom of choice
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the freedom of owners to employ or dispose of property, money, and workers as they see fit; also, the freedom of consumers to buy whatever (legal) goods and services that they want
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self-interest
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each economic unit tries to advance its own particular goal by delivering something of value to others
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competition
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the freedom of choice exercised in the pursuit of monetary return, diffusing economic power and eliminating abuse of economic power; the regulatory mechanism of the market system
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market
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an institution or mechanism that brings buyers and sellers into contact
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specialization
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the use of resources of an individual, a firm, a region, or a nation to produce one or a few goods and services rather than a whole bunch of them
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division of labor
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the specialization of human beings, saving time and making use of differences in ability
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medium of exchange
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the function of money to make trade easier when you can't barter
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barter
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swapping goods for goods, requiring buyer and seller to have same wants
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money
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the convenient social invention to facilitate exchanges if goods and services, taking on a variety of forms
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consumer sovereignty
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the assertion that consumers lead the market system
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creative destruction
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the creation of new products and production methods that completely destroys the market positions of older firms with older ways of doing business, allowing for the rapid spread of new technologies
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invisible hand
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the phenomenonadvancement of public interests through private competition and self-interest in a market system
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the coordination problem
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the difficulty of planning and coordinating outputs of industries in command systems, due to chain reactions, sophistication of industries, and inefficiency
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the incentive motive
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the difficulty posed by the lack of incentives in command systems
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circular flow diagram
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simple economic model describing the flow of resources and products between businesses and households; the businesses expend costs from the resource market and obtaining revenue from the product market and the households expend factors of production into the resource market and obtaining products from the products market
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resource market
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place where resources or services of resource providers and bought and sold; households sell resources and businesses buy them
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product market
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place where goods and services are bought and sold; businesses sell resources and households buy them
AP Microeconomics
Circular Flow Diagram
Cost Per Unit
Economic Decision Making
Economic Systems
Economics
Goods And Services
Economics Chapter 2 McConnell/Brue 18th edition – Flashcards 19 terms

Robert Lollar
19 terms
Preview
Economics Chapter 2 McConnell/Brue 18th edition – Flashcards
question
Economic System
answer
set of institutional arrangements and a coordinating mechanism
question
Command System
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A method of organizing an economy in which property resources are publicly owned and government uses central economic planning to direct and coordinate economic activities; command economy; communism
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Market System
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An economic system in which individuals, not the government control the production and distribution of goods and services; also called capitalism
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Private Property
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property owned by individuals or companies, not by the government or the people as a whole
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Freedom of Enterprise
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Ensures that entrepreneurs and private businesses are free to obtain and use economic resources to produce their choice of goods and services and to sell them in their chosen markets
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Freedom of Choice
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enables owners to employ or dispose of their property and money as they see fit
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Self-interest
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economic unit tries to achieve its own goal, usually deliver something of value to others
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Competition
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Contest between individuals for shared resources
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Market
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mechanism that brings buyers and sellers into contact
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Specialization
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Goods and services are produced in better quality, quantity and speed when people focus on producing a few things instead of making everything they want by themselves.
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Division of labor
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human specialization
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Medium of exchange
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money; makes trade easier by not having to barter
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Barter
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swapping goods for goods
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money
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social invention to facilitate exchanges of goods and services
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consumer sovereignty
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consumers are in charge, crucial in determining what goods and services are produced
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dollar votes
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when consumers spend their income on goods they are most willing and able to buy showing their wants in the market
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creative destruction
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the creation of new products completely destroys the market positions of firms wedded to existing products and older ways of doing business
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invisible hand
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Adam Smith's primary idea in WoN, people all guided by selfish acts but better off for everyone
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circular flow diagram
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chart showing movement of goods and services from markets to businesses to consumer households
Economic Decision Making
Economic Growth
Individual Decision Making
Individuals And Societies
Economics Test One – Flashcards 85 terms

Sarah Adrian
85 terms
Preview
Economics Test One – Flashcards
question
Economics
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the study of how individuals and societies choose to use the scare resources that nature and previous generations have provided
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Opportunity Cost
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the best alternative that we forgo, or give up, when we make a choice or decision
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Marginalism
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the process of analyzing the additional or incremental costs or benefits arising from a choice or decision
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Sunk Costs
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costs that cannot be avoided because they have already been incurred
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Efficient Market
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a market in which profit opportunities are eliminated almost instantaneously
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Microeconomics
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the branch or economics that examines the functioning of individual industries and the behavior of individual decision-making units (firms and households)
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Macroeconomics
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the branch f economics that examines the economy behavior of aggregates- income, employment, output on a national scale
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Positive Economics
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an approach to economics that seeks to understand behavior and the operations of systems without making judgement
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Normative Economics
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an approach to economics that analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe a course of action
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Descriptive Economics
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the complication of data that describe phenomena and facts
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Economic Theory
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a statement or set of related statements about cause and effect, action and reaction
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Model
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a formal statement of a theory, usually a mathematical statement of a presumed relationship between two or more variables
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Variable
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a measure that can change from time to time or observation to observation
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Ockham's Razor
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the principle that irrelevant detail should be cut away
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Ceteris Paribus
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"all else equal"; a device use to analyze the relationship between two variables while the values of other variables are held constant
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Empirical Economics
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the collection and use of data to test economic theories
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Efficiency
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an efficient economy is one that produces what people want as the least possible cost
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Equity
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fairness
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Economic Growth
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an increase in the total output of an economy
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Stability
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a condition in which national output is growing steadily, with low inflation and full employment of resources
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Capital
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things tat are produced and then used in the production of other goods and services
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Factors of Production
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the inputs into the process of production (land, labor, and capital)
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Production
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the process that transforms scarce resources into useful goods and services
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Inputs or Resources
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anything provided by nature or previous generations that can be used directly or indirectly to satisfy human wants
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Outputs
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goods and services of value to households
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Theory of Comparative Advantage
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Ricardo's theory that specialization and free trade will benefit all trading parties, even those that may be absolutely more efficient producers
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Absolute advantage
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a producer has an absolute advantage over another in the production of a good or service if he or she can produce that product using fewer resources
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Comparative Advantage
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a producer has an absolute advantage over another in the production of a good or service if he or she can produce that product at a lower opportunity cost
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Consumer good
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goods produced for present consumption
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Investment
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the process of using resources to produce new capital
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PPF
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a graph that shows all the combinations of goods and services that can be produced if all society's resources are used efficiently
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Marginal Rate of Transformation
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the slope of the PPF
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Economic Growth
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an increase in the total output of an economy
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Command Economy
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an economy in which a central government either directly or indirectly sets output targets, incomes, and prices
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Laissez-faire Economy
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an economy in which individual people and firms pursue their own self-interest without any central direction or regulation
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Market
answer
the institution through which buyers and sellers interact and engage in exchange
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Consumer Sovereignty
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the idea that consumers ultimately dictate what will be produced by choosing what to purchase
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Free Enterprise
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the freedom of individuals to start and operate private businesses in search of profits
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Firm
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an organization that transforms resources into products
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Entrepreneur
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a person who organizes, manages, and assumes the risks of a firm, taking a new idea or a new product and turning it into a successful business
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Households
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the consuming units in an economy
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Product or Output Markets
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the markets in which goods and services are exchanged
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Input or Factor Markets
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the markets in which the resources used to produce goods and services are exchanged
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Labor Market
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the input/factor market in which households supply work for wages to firms that demand labor
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Capital Market
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the input/factor market in which households supply their savings, for interest or for claims to future profits, to firms that demand funds to buy capital goods
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Land Market
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the input/output market in which households supply land or other real property in exchange for rent
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Quantity Demanded
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the amount of a product that a household would buy in a given period if it could buy all it wanted at the current market price
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Profit
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the difference between revenues and costs
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Quantity Supplied
answer
the amount of a particular product that a firm would be willing and able to offer for sale at a particular price during a given time period
question
Supply Schedule
answer
a table showing how much of a product firms will sell at alternative prices
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Law of Supply
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the positive relationship between price and quantity of a good supplied
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Supply Curve
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a graph illustrating how much of a product a firm will sell at different prices
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Movement Along a Supply Curve
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the change in quantity supplied brought about by a change in price
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Shift of Supply Curve
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the change that takes place in a supply curve corresponding to a new relationship between quantity supplied of a good and the price of that good brought about by a change in the original conditions
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Market Supply
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the sum of all that is supplied each period by all producers of a single product
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Demand Schedule
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a table showing how much of a given product a household would be willing to buy at different prices
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Demand Curve
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a graph illustrating how much of a given product a household would be willing to buy at different prices
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Law of Demand
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the negative relationship between price and quantity demanded
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Income
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the sum of all a household's wages, salaries, profits, interest payments, rents, and other forms of earnings in a given period of time
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Wealth
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the total value of what a household own minus what it owes
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Normal Goods
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goods for which demand goes up when income is higher and for which demand goes down when income is lower
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Inferior Goods
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goods for which demand tends to fall when income rises
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Substitutes
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goods that can serve as replacements for one another, when the price of one increases, demand for the other increases
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Perfect Substitutes
answer
identical products
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Complements
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goods that "go together"; a decrease in the price of one results in an increase in demand for the other and vice versa
question
Shift of a Demand Curve
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the change that takes place in a demand curve corresponding to a new relationship between quantity demanded of a good and price of that good
question
Movement Along a Demand Curve
answer
the change in quantity demanded brought about by a change in price
question
Market Demand
answer
the sum of all the quantities of a good or service demanded per period by all the households buying in the market for that good or service
question
Equilibrium
answer
the condition that exists when quantity supplied and quantity demanded are equal
question
Shortage
answer
the condition that exists when quantity demanded exceeds quantity supplied at the current price
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Surplus
answer
the condition that exists when quantity supplied exceeds quantity demanded at the current price
question
Price Rationing
answer
the process by which price tends towards equilibrium when there is a shortage
question
Price Ceiling
answer
a maximum price that sellers may charge for a good, usually set by government
question
Queuing
answer
waiting in line as a means of distributing goods and services
question
Favored Customers
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those who receive special treatment from dealers during situations of excess demand
question
Ration coupons
answer
tickets or coupons that entitle individuals to purchase a certain amount of a given product per month
question
Black Market
answer
a market in which illegal trading takes place at market determined prices
question
Price Floor
answer
a minimum price below which exchange is not permitted
question
Minimum Wage
answer
a price floor set for the price of labor
question
Consumer Surplus
answer
the difference between the maximum amount a person is willing to pay for a good and its current market price
question
Producer Surplus
answer
the difference between the current market price and the full cost of production for the firm
question
Deadweight Loss
answer
the total loss of producer and consumer surplus from underproduction or overproduction
question
Elasticity
answer
a general concept used to quantify the response in one variable when another variable changes
question
Elastic Demand
answer
a demand relationship in which the percentage change in quantity demanded is larger than the percentage change in price in absolute value
question
Inelastic Demand
answer
demand that corresponds somewhat, but not a great deal, to changes in price