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AP Microeconomics Law Of Increasing Costs Principles Of Economics: Macroeconomics Principles Of Economics: Microeconomics

ECON 202 – Flashcard 43 terms

Elizabeth Bates

43 terms

Preview

ECON 202 – Flashcard

question

1. Which of the following is not a resource?

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d. Tax payments

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2. In a market system, which of the following determines who gets what is produced?

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a. The amount of resources that individuals own. b. The prices attached to the resources that individuals own

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3. In order to achieve production efficiency:

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b. whatever output is produced must be produced at the lowest possible cost

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You pay $10 for a ticket to go to a basketball game. In order to drive to the game, you use up $1 of gas. If you had not attended the basketball game you could have spent your time fixing your car thereby saving $25 of labor costs, or used the time to help someone move and earned $20. What was the opportunity cost of attending the game?

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c. $36

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5. The concept of scarcity as used by economists refers to which of the following?

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b. A situation in which there are not enough available resources to satisfy all the wants and desires of the people

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In an experiment in welfare administration, residents of a poor neighborhood are given certain number of clothing stamps each month in addition to their regular food stamps. Soon we observe people trading clothing stamps for food stamps and vice versa. After observing this, the economist would say that:

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b. there has been an increase in allocation efficiency in the community

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7. In a market system, how goods and services will be produced is determined by which of the following?

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a. Consumers ??b. Producers c. Resource owners d. Government

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8. Which of the following is the primary identifying characteristic of capitalism?

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a. Private ownership of the means of production (resources)

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9. An economic system:

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a. is a social mechanism that organizes and coordinates economic activity

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10. An example of the term double coincidence of wants is:

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c. a gardener who would like legal services and a lawyer who hates to get his hands dirty, but enjoys having flowers in his garden

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Assume that the economy produces two groups of goods: civilian goods and military goods. An advancement in technology in the production of military goods may possibly result in which of the following?

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c. An increase in the production of both military goods and civilian goods

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Which of the following is the rationale for the law of increasing opportunity cost?

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a. Economic resources are perfectly adaptable to alternative uses

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15. Which of the following is true of theories?

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a. A theory is a simplification of reality

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16. Which of the following is a formal statement regarding the relationship between two or more variables that is capable of falsification?

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b. An hypothesis

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17. Which of the following is a reason why consumers want to buy more of a good when its price decreases, ceteris paribus?

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a. Consumers expect the price to rise again in the future d. The lower price increases the purchasing power of consumers income enabling them to buy more

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18. A rightward shift in the demand for popcorn could be the result of:

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d. an increase in income

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"When I was poor and starting my work career I drank a lot of Coors beer and not much Sam Adams beer. Now that I have a high paying job, I rarely drink Coors beer; rather I drink a lot of Sam Adams beer" This statement suggests that for this person Coors beer is:

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b. an inferior good

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The price of gasoline is $1 per gallon. At that price, consumers want to buy 1,000 gallons weekly and producers want to sell 2,000 gallons weekly. Which of the following will occur if the market for gasoline is a competitive market?

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b. Price will fall below $1, and producers will tend to offer less than 2,000 gallons **There's a surplus, price will drop in any surplus. Go down towards $.50. People will buy more, Producers will be making less.

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21. Quantity demanded is:

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a. the total amount of a good that consumers desire to purchase during a given time period, in a given geographic area

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Of the following , which is a reason why the quantity supplied of good X increases when the price of good X increases, ceteris paribus. When the price of good X increases:

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a. consumers expect the price of the good to increase more in the future b. other goods that producers might produce become more attractive alternatives c. the wages of workers rise d. it becomes more profitable for producers to employ more resources in the production of good X

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23. When one speaks on "demand" in a particular market, she is referring to:

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a. the whole demand curve

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24. If an increase in the price of good X causes the demand for good Y to decrease, it can be concluded that:

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b. X and Y are complements

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Zinc and silver are complementary goods in production. Assume that the price of zinc increases, ceteris paribus. This would be predicted to result in which of the following changes in the equilibrium price and quantity of silver?

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c. Price increases, quantity increases

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Assume that consumers expect the price of automobiles to increase in the future (next period), ceteris paribus. This would be predicted to result in which of the following changes in the equilibrium price and quantity of automobiles now (this period)?

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a. Price decreases, quantity increases b. Price decreases, quantity decreases c. Price increases, quantity increases d. Price increases, quantity decreases

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Assume that potatoes are an inferior good. Suppose that the level of consumer income increases, ceteris paribus. This would be predicted to result in which of the following changes in the equilibrium price and quantity of potatoes?

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a. Price decreases, quantity increases b. Price decreases, quantity decreases c. Price increases, quantity increases d. Price increases, quantity decreases

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28. Assume that the government gives a subsidy of $5 on each bushel of wheat producers produce, ceteris paribus. This would be predicted to result in which of the following changes in the equilibrium price and quantity of wheat?

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AAA a. Price decreases, quantity increases b. Price decreases, quantity decreases c. Price increases, quantity increases d. Price increases, quantity decreases

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31. Suppose that the government increases the excise tax on beer by $10 per barrel. In which situation will the largest part of the tax increase be passed on to the consumer?

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b. Elastic demand for beer, inelastic supply of beer d. Elastic demand for beer, inelastic supply of beer

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32. Which of the following is a true statement about a negatively sloped, straight line demand curve?

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c. It has a constant elasticity throughout its length

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33. A supermarket raises the price of its meat and finds that the total revenue that its meat department makes decreases. We can conclude that:

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c. the demand for meat is price elastic

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Suppose that an automobile dealer reduces car prices by 10% and finds that he sells 15% more automobiles. The demand for her automobiles is:

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AAA a. price elastic

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Suppose you are the oil minister of an oil producing nation. If you want to maximize your total revenue from selling oil, which price would you charge?

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a. The price at which the coefficient of price elasticity of demand for oil is at a maximum b. The price at which the coefficient of price elasticity of demand for oil is equal to one c. The price at which the coefficient of price elasticity of demand for oil is zero d. The highest possible price the market would bear

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If a government tax official is interested in generating maximum possible tax revenue from placing an excise tax on a good, she should place the tax on a good for which:

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a. the demand is price elastic b. the demand is price inelastic c. the demand is unit elastic at every price d. the supply is infinitely elastic

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Suppose that you are on a committee considering ways to raise revenue for your college athletic program. You would recommend increasing the price of football tickets only if you thought:

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a. the demand for football tickets was price elastic b. the demand for football tickets was price inelastic c. the demand for football tickets was unit elastic d. the demand for football tickets was income elastic

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38. The elasticity of demand for a good is likely to:

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a. increase when the elasticity of supply increases b. decrease when the elasticity of supply increases c. be higher the longer a price change persists d. be higher the shorter a price change persists

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In rejecting the call for a reduction in the price of textbooks, a major publisher says: "lowering the price won't sell a single additional book." She must believe the demand for textbooks is:

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a. infinitely elastic. b. perfectly inelastic. c. unit elastic. d. positively sloped.

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40. Opportunity cost exists because:

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a. of waste and inefficiency in the economic system. b. resources are limited and human wants and desires are unlimited, which requires individuals to make choices. c. of the institution of money. d. of business firms that produce goods and services.

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41. Which of the following statements about opportunity cost is incorrect?

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a. Opportunity cost always involves giving up a certain amount of money to get what you want. b. Opportunity cost is an important determinant of human behavior. c. Opportunity cost is subjective; it may differ for different individuals. d. None of the above.

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42. When economists say that people behave rationally, this means:

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a. they have perfect information when making a choice. b. people respond in predictable ways to changes in costs and benefits. c. people never make mistakes and regret a choice they have made. d. people only consider the cost of a choice; they disregard the potential benefits.

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43. An economic incentive:

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a. always involves money. b. does not influence the choices a rational individual makes. c. is irrelevant for poor people. d. is anything that changes the benefit or cost of an alternative for an individual.

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44. If the price of potato chips increases, the demand for potato chip dip will:

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a. increase because the goods are substitutes. b. decrease because the goods are substitutes. c. increase because the goods are complements. d. decrease because the goods are complements.

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45. Which of the following would most likely increase the supply of college textbooks?

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a. Five major publishers go out of business b. The cost of paper doubles. c. There has been an advancement in book production technology. d. The wage rate of book printers increases.

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46. The demand for salmon is:

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b. less elastic than the demand for fish because there are more substitutes for fish in general than for salmon

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Jennifer usually buys three CDs per week. She expects the price of CDs to increase by 10% next week. What does the theory of demand hypothesize will happen to Jennifer's demand for CDs this week?

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a. It increases because she expects price to be higher next week.

STUDY

Cost Benefit Analysis Economics Factors Of Production Goods And Services Law Of Increasing Costs

Unit 1 Economics Test Questions – Flashcards 55 terms

Christine Brunetti

55 terms

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Unit 1 Economics Test Questions – Flashcards

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From economics, we learn that people have to make ________ when they are faced with limited _________.

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Choices Resources

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All people have ________, which are things that may improve their lives.

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Needs

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Most people have ________, which are things that may improve their lives.

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Wants

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Physical things that people produce are_________.

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Goods

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Actions performed for a fee _____.

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Services

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Limited resources are the cause of ______.

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Scarcity

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A temporary low supply of an item is called a ______.

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Shortage

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An ____________ brings together the factors of production to make new or improved goods or services.

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Entrepreneur

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The factors of production are ________, ________, and _________.

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Land Capital Labor

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Natural resources such as oil and forests are included in the factor called _____.

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Land

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The work people to do is called _______.

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Labor

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Buildings and tools are _________ capital.

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Physical

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A worker's skills are called _______ capital.

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Human

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Giving up one thing for another is called a _________.

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Trade-Off

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The term "guns or butter" refers to a trade-off between military goods and __________ goods.

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Consumer

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The cost of the next best choice in a trade-off is called the _________.

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Opportunity Cost

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When you decide how much more or less to do, you are thinking at the _____.

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Marginal

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To do a cost/benefit analysis, you must weigh the marginal ______ against the marginal ______.

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Cost Benefit

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A graph that shows alternative ways to use resources is called a ______ ______ curve.

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Production Possibilities

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______ means that an economy is using its resources in a way that produces the most goods and services.

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Efficiency

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When resources are available but are not being used, an economy experiences ______.

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Underutilization

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The law of increasing costs say that opportunity costs increase when ______ switches from one item to another.

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Production

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The answer to the question "What should be _____?" tells where resources will be used.

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Produced

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The question "______ should things pre produced?" shows how people will use capital

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How

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The third question a society must answer is "Who should ______ what is produced?"

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Consume

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When the ______ of living is improving, the country's economy is ______.

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Standard Growing

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Economic ______ means a society does not waste its resources.

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Efficiency

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Americans have economic ______, and so can choose their jobs.

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Freedom

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When a country tries to even out what its workers earn, it creates ______, or fairness.

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Equity

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A ______ economic system is based on what the society has done in the past.

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Traditional

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______ happens very slowly.

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Changes

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Buyers and sellers have the freedom to make a ______ exchange, or willing transfer.

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Voluntary

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______, or the contest between firms, gives consumers ______ to spend because of the lower price.

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Competition Incentive

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Advantages of a free market economy include: changing what is ______ when conditions change, ______ freedom, and ______ leading to economic growth.

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Produced Economic Competition

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The ______ decides the answers to the three basic economic questions.

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Government

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Command economies are found in two political economic systems known as ____ and ______.

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Communism Socialism

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Because there is little ______, there is little economic growth.

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Innovation

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Both ______ and the ______ make economic decisions.

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Market Individual

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People who believe in laissez faire do not want the ______ to make economic decisions.

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Government

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The U.S. has a ______ enterprise system, with most investment decisions made by ______.

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Free Individuals

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Four principles of free enterprise are the ______ motive, ______ equality, private ______, and voluntary ______.

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Profit Legal Property Exchange

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Consumers send ______ to businesses by buying or not buying a good or service.

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Signals

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The Constitution protects the right to ______ ______ and to make ______. It also spells out rules about ______.

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Own Private-Property Contracts Taxation

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The government keeps consumers _____. It also protects the ______ ______ by regulating some ______ activities.

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Informed Public Interest Business

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______ is the study of the overall economy.

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Marcoencomic

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______ is the study of the economy that focuses on small units.

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Microeconomic

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Up and down patterns in the ______ are called the business cycle.

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GDP

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The government has three goals to promote economic strength: high ______ , ______ , and ______.

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Growth Employment Stability

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Improved ______ increases productivity. The government promotes new ideas by granting _____ and ______.

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Technology Patents Copyrights

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Public goods are those that would be hard to make people pay for ______ and ______ free riders from using.

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Individuals Exclusion

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Everyone pays for public goods through ______.

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Taxes

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Public goods are examples of market failure because the ______ _____ cannot distribute the ______.

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Free Market Efficiency Side Effects

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______ is government aid for those in need.

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Welfare

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The government's four main ______ transfer programs are ______ Assistance for Needy Families (TANF), ______ Security, ______ insurance, and workers' ______.

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Cash Temporary Social Un-Employment Compensation

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Tax law encourages donations to private ______, and government gives ____ to groups that provide social services.

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Charities Grants

STUDY

Economics Law Of Increasing Costs Principles Of Economics: Macroeconomics Principles Of Economics: Microeconomics Private Ownership Of Property Production Possibilities Curve

BUAD 113: Economics – Flashcards 21 terms

Deloris Connelly

21 terms

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BUAD 113: Economics – Flashcards

question

The economic problem is essentially one of deciding how to make the best use of: Select one: a. unlimited resources to satisfy unlimited wants b. limited resources to satisfy unlimited wants c. unlimited resources to satisfy limited wants d. limited resources to satisfy limited wants e. free resources to satisfy expensive wants

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b. limited resources to satisfy unlimited wants

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Economists assume that people customarily behave rationally, meaning that people: Select one: a. virtually always weigh the personal benefits and costs of every available action and choose an action on the basis of their individual wants b. act in a rational way when buying and selling products, but not in other settings c. act rationally when they buy products, but not when they sell them d. act rationally when they sell products, but not when they buy them e. are unable to act in an irrational way

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a. virtually always weigh the personal benefits and costs of every available action and choose an action on the basis of their individual wants

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Because of scarcity, the efficient use of resources is: Select one: a. an important economic goal in all economies b. an important economic goal only in command economies c. an important economic goal only in market economies d. not an important economic goal e. an important economic goal only in traditional economies

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a. an important economic goal in all economies

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Stocks and bonds are not considered to be an economic resource because they: Select one: a. sometimes fall in value b. do not earn interest income c. are available in unlimited quantities d. are not free gifts of nature e. do not add to the economy's stock of real capital

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e. do not add to the economy's stock of real capital

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The money payments made to owners of human resources are: Select one: a. wages, salaries, or interest b. wages, salaries, or rent c. interest or profit d. wages, salaries, or profit e. rent or profit

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d. wages, salaries, or profit

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Which of the following is a capital resource? Select one: a. a pair of stockings b. a dump truck c. a savings account d. a share of IBM stock e. a Bell Canada bond

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b. a dump truck

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Which of the following is a microeconomic statement? Select one: a. Total economic output increased by 2.5 percent last year. b. Unemployment was 9.8 percent of the labour force last year. c. The price of wheat declined last year. d. The general price level increased by 4 percent last year. e. Business investment decreased by 2 percent last year.

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c. The price of wheat declined last year

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Macroeconomics approaches the study of economics from the viewpoint of: Select one: a. individual producers b. governmental units c. specific product and resource markets d. individual consumers e. entire economic sectors

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d. individual consumers e. entire economic sectors

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Economic models: Select one: a. are useless because they are not based upon laboratory experiments b. deal with a multitude of details c. are generalizations of economic reality d. are abstractions of reality and are, therefore, of no use to economists e. are more effective the more complex they are

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c. are generalizations of economic reality

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Which of the following is a correct statement? Select one: a. Economics is concerned only with explaining the way that economies actually operate and not with how they should operate. b. Though not quantitatively exact, economic laws are useful because they allow us to predict and, therefore, to control or to adjust to events. c. Economics is as scientific as physics and chemistry because economic laws are as quantitatively precise as the laws of physics or chemistry. d. Because economics is concerned with questions of "ought," it is a branch of applied ethics and not scientific. e. Economics is concerned with how economies should operate and not with how they do operate.

answer

b. Though not quantitatively exact, economic laws are useful because they allow us to predict and, therefore, to control or to adjust to events.

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Ceteris paribus means that: Select one: a. if event A precedes event B, A has caused B b. economics deals with facts, not values c. if event A happens then event B cannot happen d. prosperity inevitably follows recession e. all other things remain the same

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e. all other things remain the same

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The basic purpose of the ceteris paribus assumption is to: Select one: a. isolate the relationship between two variables by assuming all other factors remain constant b. allow one to focus upon micro variables by ignoring macro variables c. allow one to focus upon macro variables by ignoring micro variables d. determine whether x causes y or vice versa e. determine whether two variables are directly or inversely related

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a. isolate the relationship between two variables by assuming all other factors remain constant

question

Which of the following is a positive statement? Select one: a. The humidity is too high today. b. It is too hot to jog today. c. The temperature is 22°C. d. I enjoy summer evenings when it cools off. e. I dislike humid nights.

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c. The temperature is 22°C.

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Which of the following is a normative statement? Select one: a. The temperature is high today. b. The humidity is high today. c. It is too hot to play tennis today. d. It will cool off later this evening. e. I think it will be hot today.

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c. It is too hot to play tennis today.

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Utility refers to the: Select one: a. extent to which a product can be used as a capital resource b. opportunity cost of a product c. relative scarcity of a product d. usefulness of a product e. satisfaction that a consumer derives from a good or service

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e. satisfaction that a consumer derives from a good or service

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Which of the following expressions best states the idea of opportunity cost? Select one: a. "A penny saved is a penny earned." b. "He who hesitates is lost." c. "There is no such thing as a free lunch." d. "All that glitters is not gold." e. "Watch the pennies, and the pounds will look after themselves."

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c. "There is no such thing as a free lunch."

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The production possibilities curve illustrates the basic principle that: Select one: a. the production of more of any one item will in time require smaller and smaller sacrifices of other items b. an economy automatically seeks that level of output that employs all of its resources c. if all the resources of an economy are fully used, more of one item could be produced only if less of another item is produced d. any production point below the curve reflects high opportunity cost e. any production point above the curve reflects low opportunity cost

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c. if all the resources of an economy are fully used, more of one item could be produced only if less of another item is produced

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Modern mixed economy refers to an economy: Select one: a. with both product and resource markets b. that engages in both domestic and international trade c. with both private and public sectors d. that functions primarily on the basis of custom and tradition e. that operates on the basis of central planning

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c. with both private and public sectors

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The unemployment rate includes: Select one: a. pensioners b. homemakers c. brewery workers who have been laid off recently d. students working part-time at a grocery store e. young children

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c. brewery workers who have been laid off recently

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The Kyoto Protocol: Select one: a. aims to increase emissions of so-called greenhouse gases, in particular carbon dioxide b. was signed by over 170 countries, including Canada c. ensures that all countries in the world cut greenhouse gases until 2012 d. requirements will be met by Canada, but by few other countries e. imposes a global carbon tax

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b. was signed by over 170 countries, including Canada

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Laissez-faire suggests that: Select one: a. land and other natural resources should be privately owned but capital should be owned by the government b. land and other natural resources should be owned by the government but capital should be privately owned c. government should not interfere with the operation of the economy d. government action is necessary if the economy is to achieve full employment e. government policies are needed to deal with environmental damage

answer

c. government should not interfere with the operation of the economy

STUDY

Economics Law Of Increasing Costs

Final Exam: Economics – Flashcards 60 terms

Darren Farr

60 terms

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Final Exam: Economics – Flashcards

question

Factors of Production (1.1)

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land, labor, and capital - the three groups of resources that are used to make all goods and services

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Why are choices necessary? (1.2)

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Economic choices are necessary because resources are limited while the human wants are unlimited. People need to make the best decision between/among alternatives

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Opportunity Cost (1.2)

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The most desireable alternative given up as a result of a decision

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Economic System: Privite ownership of capital goods (2.4)

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State firms must be privitized, or sold to individuals, and then allowed to compete with one another in the marketplace

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Purpose of Competition (3.1)

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Competition is the rivalry amont sellers to attract customers while lowering costs. It provides customers with a larger variety of goods, most of which are sold at reasonable prices

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The US Economic System (2.4)

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It's founded on a free market and free enterprise; private or corporate ownership of capital goods; investments that are determined by private decision rather than by state control; and determined in a free market

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Phases of the Business Cycle (12.2)

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A period of macro-economic expansion followed by a period of contraction Peak Peak Contr- Expan- action Trough sion

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Economic Side Effects (15.2)

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The by-product of a market failure - externalities - school of economics that believes tax cuts can help an economy by raising supply

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Demand-Pull Theory (13.2)

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Theory that inflation occurs when demand for goods and services exceeds existing supplies

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Entitlement Programs (14.3)

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Social welfare programs that people are "entitled" to if they meet certain eligibility requirements

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Law of Demand (4.1)

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consumers buy more of a good when its price decreases and less when its price increases

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Quantity Supplied is Greated than Quantity Demanded (5.1)

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When quantity supplied - the amount a supplier is willing and able to supply at a certain price - is greater than quantity demanded, the prices will fall.

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Law of Supply (5.1)

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Tendency of suppliers to offer more of a good at a higher price

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Start-up Costs (7.1)

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The expenses a firm must pay before it can begin to produce and sell goods

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Barriers to Entry (7.1)

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Any factor that makes it difficult for a new firm to enter a market

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Relationship between Deregulation and Competition (7.4)

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Deregulation is the removal of some government controls over a market. Competition is the rivalry between sellers to attract customers (See Purpose of Competition). Competition increases with more deregulation.

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Patent Rights and Technological Progress (7.2)

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The government can give companies monopoly power by issuing patents, exclusive rights to sell a new good or service for a specific period of time. When firms create new innovations and technology, it can destroy natural monopolies.

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Different Types of Partnerships (8.2)

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Business organizations owned by two or more people who agree on a specific division of respoonsibilities and profits. General: Two equal partners Limited: One partner carries all the liability Limited Liability Parntership: all partners have limited liability

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Advantages and Disadvantages of Sole Proprietorships (8.1)

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ADVANTAGES: Easy start-up Few regulations Sole reciever of profits Full Control Easy to discontinue DISADVANTAGES: Unlimited personal liability Limited access to resources Lack of permanence

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Advantages and disadvantages of Incorporation(8.3)

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ADVANTAGES: Limited liability for owners Transferable ownership Ability to attract capital Long life DISADVANTAGES: Expensive and difficult start-up Double Taxation Potential loss of control by founders More legal requirements and regulations

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How has Outsourcing Impacted Jobs? (13.1)

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Structural unemployment: workers' skills don't match the available jobs E.G. Celia lost her job on an automobile assembly line when NAFTA went into effect. Her company moved its assembly work to Mexico where labor is cheaper.

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Production Possibilties Graph (1.3)

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Shows alternative ways to use an economy's resources Watermelon: 0, 8, 14, 18, 20, 21 Shoes: 15, 14, 12, 9, 5, 0

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Money and Valuables Belonging to a Corporation (8.2)

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Assets: each partners' assests improve the firm's ability to borrow funds for operations and expansions

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The Amount of Money Left after Taxes (12.1)

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Disposable income = Personal Income - Individual Income Taxes

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Characteristics of a U.S. Savings Bond (11.2)

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Low-denomination bond issued by the U.S. government ($50 to $10,000), the funds are used to pay for public works

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On a loan, what is the initial amount of money loaned out called? (10.3)

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Principal is the amount of money borrowed, but borrowers must also pay back interest

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Price Paid for Borrowing Money (10.3)

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Interest - the price paid in addition to paying back the principal

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Lower Risk Investments Will Give _____ Return (11.1)

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Lower (Higher potential returns come from riskier investments.)

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GDP (12.1)

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Gross Domestic Product: the total market value of all final goods and services produced annually in an economy~measure of the United States economy adopted in 1991

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How to Calculate GDP - What Is included and What Isn't (12.1)

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Economy's output is cars and trucks: 10 cars at $15.000 each = $150,000 +10 trucks at $20,000 ea.=$200,000 _____________________________ Total = $350,000

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Real GDP

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GDP expressed in constant, or unchanging, prices

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Proper Unemployment Rate During Good Economic Times (13.1)

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It should hover around 4% to 6%

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Main Source of Revenue through Local Government

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Taxes on property

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Sales Tax

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a tax based on the cost of the item purchased and collected directly from the buyer

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Is the Federal Income Tax Progressive?

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Yes. (The federal income tax is progressive, a tax that charges more for higher incomes.)

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Proportional Tax

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a tax for which high-income and low-income taxpayers pay the same fraction of income

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The Largest Category of Federal Spending (14.2)

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The largest category of federal spending is social sercurity

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Where Does the Government's Right to Collect Taxes Come From?

answer

The Constitution (vague) and amendments (more specific)

question

How Can the Federal Reserve Encourage or Discourage Loans?

answer

One of the method of discourage bank loans (and most commonly used) is to influence the interest rate. With a high interest rate, people are more inclined to save rather than borrow (due to high return)

question

How does the Federal Reserve counteract inflation caused by an expansion?

answer

It uses a tight money policy, constricting spending in an economy that is growing too quickly, or to curb inflation when it is rising too fast. The Fed will "make money tight" by raising short-term interest rates (also known as the Fed funds, or discount rate), which increases the cost of borrowing and effectively reduces its attractiveness.

question

Trade Deficit (17.3)

answer

The result of a nation importing more than it exports

question

Examples of Contractionary Fiscal Policies (15.1)

answer

Fiscal policies, like lower spending and higher taxes, that reduce economic growth

question

NAFTA (17.2)

answer

Agreement that will eliminate all tariffs and other trade barriers between Canada, the U.S., and Mexico

question

Economic Growth and Savings Accounts (12.2)

answer

A steady, long-term increase in real GDP

question

Comparative Advantage (17.1)

answer

The ability to produce a product most efficiently given all the other products that could be produced

question

Absolute Advantage (17.1)

answer

The ability to produce more of a given product using a given amount of resources

question

Wages and Progressive Taxes (14.1)

answer

Progressive taxes are based on the percentage of income paid in taxes which increase as income increases

question

Diversification and Investments (11.1)

answer

Diversification is spreading out investments to reduce risk. Investments redirect resources from being consumed today so that they may create benefits for the future; the use of assets to earn income or profit.

question

Change on Demand and Supply Curve -> Reading Graphs (4.1 and 5.1)

answer

Demand Curve~ a graphic representation of a demand schedule Supply Curve~ a graph of the quantity supplied of a good at different prices

question

Circular Flow Diagrams of a Free Market

answer

It describes the flow of money and products throughout the economy in a very simplified way. The model represents all of the actors in an economy as either households or firms (companies), and it divides markets into two categories: markets for goods and services and markets for factors of production (factor markets).

question

Circular Flow Diagrams of a Mixed Economy

answer

It describes the flow of money and products throughout the economy in a very simplified way. The model represents all of the actors in an economy as either GOVERNMENT or firms (companies), and it divides markets into two categories: markets for goods and services and markets for factors of production (factor markets).

question

Indicators of Stock Market Performance

answer

DOW Jones and S&P 500 (An index measures the performance of its constituents. It gives an indication of the OVERALL market performance. It can be used as a benchmark, for example, for a managed portfolio of SOME of the constituents. An index doesn't predict anything nor does it purport to and it is historic. Let's say we had an index of the US housing market (the whole of the USA). The index is established by taking the value of every house in the US (or every house sold) and dividing by the number of houses in the valuation. If the index goes up we can say the house prices in the US are going up and vice versa.)

question

FDIC

answer

The FDIC directly examines and supervises more than 4,500 banks and savings banks for operational safety and soundness, more than half of the institutions in the banking system. Banks can be chartered by the states or by the federal government. Banks chartered by states also have the choice of whether to join the Federal Reserve System. The FDIC is the primary federal regulator of banks that are chartered by the states that do not join the Federal Reserve System. In addition, the FDIC is the back-up supervisor for the remaining insured banks and thrift institutions.

question

Economic Continuum

answer

a range with no clear divisions. On one end of the eco. Con. Is centrally planned governments (I.e. north korea) and on the other end is the free market (like america) Capitalism>Socialism>Communism

question

Elastic Goods

answer

luxury items, items with substitues items that don't take much income; means that with a little change in price (little effort) means a big change in demand or supply.

question

Inelastic Goods

answer

not sensitive to change in price ~ water, fossil fuels, minerals, prescription drugs, clothing, food

question

GDP per capita calculation

answer

GDP/population, total value of goods and services produced in a year divided by the population

question

Equilibrium: what it looks like

answer

equality of distribution in supply and demand

question

Developed Nations

answer

nations with relatively high standards of living and economies based more on industry than on agriculture Pros•Easy access to information via books and the internet. •Quality educational opportunities •Improved access to health services •Availability of balanced diet options •Credit, banking, and other financial services readily available •More economic opportunities •Increased variety of entertainment options •Wide array of consumer choices •Freedom to travel i.e. road conditions, flight prices, public transportation and other reduced transportation costs makes mobility much easier •Stronger emphasis placed on values of tolerance, equality, and diversity. •A general feeling of care and stewardship for the environment Cons•Lack of strong sense of community •Often overly busy, rigidly structured schedules and by consequence, lives. •Higher levels of stress and perfectionism •Lack of friendliness to strangers •Insatiable desires and a general lack of gratitude and appreciation •A more dogmatic and defensive approach to personal beliefs and opinions •People are often overly sensitive/easily offended

question

Fiat Money System

answer

A system in which the definitive money is money authorized by a central bank or governmental body as legal tender. Paper currency and coins issued by the government are definitive money in this system.

STUDY

Economics Economics Is The Study Of Law Of Increasing Costs

Ch 1 Test – What Is Economics: Economics AGS – Flashcards 13 terms

Ann Ricker

13 terms

Preview

Ch 1 Test – What Is Economics: Economics AGS – Flashcards

question

The work people do is a resource called ______.

answer

labor

question

Work people do for other people for a fee is called ______.

answer

service

question

Scarcity is a problem of limited resources but unlimited ______.

answer

needs and wants

question

The cost of trade-offs is called a ______.

answer

opportunity cost

question

All the combinations of goods and services that can be produced are referred to as ______.

answer

production possibilities

question

Water and minerals are examples of ______.

answer

natural resources

question

Splitting a job into parts is called ______.

answer

division of labor

question

Natural resources are ______ found on Earth.

answer

raw materials

question

Economics is the study of how people and countries make decisions about using ______.

answer

resources

question

Wants are not necessary for survival but can make our lives ______.

answer

better

question

Limited resources but unlimited wants create ______.

answer

scarcity

question

Buying a basketball instead of taking a friend to a movie is an example of a(n) ______.

answer

friendship

question

Production ______ are combination of goods and services that can be produced from a fixed amount of resources in a given period of time.

answer

possibilities

STUDY

Economics Law Of Increasing Costs Production Possibility Curve

AP Microeconomics – Flashcards 115 terms

Ken Ericksen

115 terms

Preview

AP Microeconomics – Flashcards

question

Economics

answer

The study of how people, firms, and societies use their scarce productive resources to best satisfy their unlimited material wants.

question

Resources

answer

Factors of production, 4 categories: labor, physical capital, land/natural resources, and entrepreneurial ability

question

Scarcity

answer

The imbalance between limited productive resources and unlimited human wants

question

Opportunity Cost

answer

The most desirable alternative given up as the result of a decision

question

Marginal Benefit (MB)

answer

The additional benefit received from the consumption of the next unit of a good or service

question

Marginal Cost (MC)

answer

The additional cost incurred from the consumption of the next unit of a good or a service

question

Marginal Analysis

answer

The rational decision maker chooses an action if MB ≥ MC

question

Law of Increasing Costs

answer

The more of a good that is produced, the greater the opportunity cost of producing the next unit of that good

question

Absolute Advantage

answer

Exists if a producer can produce more of a good than all other producers

question

Comparative Advantage

answer

Exists if a producer can produce a good at lower opportunity cost than all other producers

question

Specialization

answer

When firms focus their resources on production of goods for which they have comparative advantage

question

Productive Efficiency

answer

Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient

question

Allocative Efficiency

answer

Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF

question

Economic Growth

answer

Occurs when an economy's production possibilities increase. This can be a result of more resources, better resources, or improvements in technology.

question

Market Economy (Capitalism)

answer

An economic system based upon the fundamentals of private property, freedom, self-interest, and prices

question

Law of Demand

answer

Holding all else equal, when the price of a good rises, consumers decrease their quantity demanded for that good

question

Absolute prices

answer

The price of a good measured in units of currency

question

Relative Prices

answer

The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter

question

Substitution Effect

answer

The change in quantity demanded resulting from a change in the price of one good relative to other goods

question

Income Effect

answer

The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)

question

Determinants of Demand

answer

Consumer income, prices of substitute and complementary goods, consumer tastes and preferences, consumer speculation, and number of buyers in the market all influence demand

question

Normal Goods

answer

A good for which higher income increases demand

question

Inferior Goods

answer

A good for which higher income decreases demand

question

Substitute Goods

answer

Two goods are consumer substitutes if they provide essentially the same utility to consumers

question

Complementary Goods

answer

Two goods are consumer complements if they provide more utility when consumed together than when consumed separately

question

Law of Supply

answer

Holding all else equal, when the price of a good rises, suppliers increase their quantity supplied for that good

question

Determinants of Supply

answer

Costs of inputs, technology and productivity, taxes/subsidies, producer speculation, price of other goods that could be produced, and number of sellers all influence supply

question

Market Equilibrium

answer

Exists at the point where the quantity supplied equals the quantity demanded

question

Shortage

answer

Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied

question

Surplus

answer

Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.

question

Total Welfare

answer

The sum of consumer surplus and producer surplus

question

Consumer surplus

answer

The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price

question

Producer surplus

answer

The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price

question

Price elasticity

answer

Ed = (%dQd)/(%dP). Ignore negative sign

question

Price elastic demand

answer

Ed > 1, meaning consumers are price sensitive

question

Price inelastic demand

answer

Ed < 1

question

Unit elastic demand

answer

Ed = 1

question

Perfectly inelastic

answer

Ed = 0, no response to price change

question

Perfectly elastic

answer

Ed = ∞, infinite change in demand to price change

question

Determinants of elasticity

answer

Substitutes, cost as percentage of income, and time to adjust to price changes all influence price elasticity

question

Total Revenue

answer

TR = P * Qd

question

Total Revenue Test

answer

Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic

question

Income Elasticity

answer

Ei = (%dQd good X)/(%d Income)

question

Luxury

answer

Ei > 1

question

Necessity

answer

0 < Ei < 1

question

Cross-Price Elasticity of Demand

answer

Ex,y = (%dQd good X) / (%d Price Y). If Ex,y > 0, goods X and Y are substitutes. If Ex,y < 0, goods X and Y are complementary

question

Price Elasticity of Supply

answer

Es = (%dQs) / (%dPrice)

question

Excise Tax

answer

A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax

question

Incidence of Tax

answer

The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic

question

Dead Weight Loss

answer

The lost net benefit to society caused by a movement away from the competitive market equilibrium

question

Subsidy

answer

Has opposite effect of an excise tax, as it lowers the marginal cost of production, forcing the supply curve down

question

Price floor

answer

A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price, it creates a permanent surplus

question

Price Ceiling

answer

A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price, it creates a permanent shortage

question

Law of Diminishing Marginal Utility

answer

The marginal utility from consumption of more and more of that item falls over time

question

Constrained Utility Maximization

answer

For one good, constrained by prices and income, a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received

question

Utility Maximizing Rule

answer

MUx / Px = MUy/Py or MUx/MUy = Px/Py

question

Accounting Profit

answer

The difference between total revenue and total explicit costs

question

Economic Profit

answer

The difference between total revenue and total explicit and implicit costs

question

Explicit costs

answer

Direct, purchased, out-of-pocket costs paid to resource suppliers provided by the entrepreneur

question

Implicit costs

answer

Indirect, non-purchased, or opportunity costs of resources provided by the entrepreneur

question

Short run

answer

A period of time too short to change the size of the plant, but many other, more variable resources can be changed to meet demand

question

Long Run

answer

A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit

question

Production function

answer

The mechanism for combining production resources, with existing technology, into finished goods and services

question

Fixed inputs

answer

Production inputs that cannot be changed in the short run. Usually this is the plant size or capital

question

Variable inputs

answer

Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials

question

Total Product of Labor (TPL)

answer

The total quantity, or total output of a good produced at each quantity of labor employed

question

Marginal Product of Labor (MPL)

answer

The change in total product resulting from a change in the labor input. MPL = dTPL/dL, or the slope of total product

question

Average Product of Labor (APL)

answer

Total product divided by labor employed. APL = TPL/L

question

Total Fixed Costs (TFC)

answer

Costs that do not vary with changes in short-run output. They must be paid even when output is zero.

question

Total variable costs (TVC)

answer

Costs that change with the level of output. If output is zero, so are TVCs.

question

Average Fixed Cost (AFC)

answer

AFC = TFC/Q

question

Average Variable Cost (AVC)

answer

AVC = TVC/Q

question

Average Total Cost (ATC)

answer

ATC = TC/Q = AFC + AVC

question

Economies of Scale

answer

The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization, lower cost of inputs, or other efficiencies of larger scale.

question

Constant Returns to Scale

answer

Occurs when LRAC is constant over a variety of plant sizes

question

Diseconomies of Scale

answer

The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms, which results in lost efficiency and rising per unit costs.

question

Perfect competition

answer

Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit

question

Profit Maximizing Rule

answer

All firms maximize profit by producing where MR = MC

question

Break-even Point

answer

The output where ATC is minimized and economic profit is zero

question

Shutdown Point

answer

The output where AVC is minimized. If the price falls below this point, the firm chooses to shut down or produce zero units in the short run

question

Perfectly competitive long-run equilibrium

answer

Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0

question

Normal Profit

answer

Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources

question

Constant cost industry

answer

Entry (or exit) of firms does not shift the cost curves of firms in the industry

question

Increasing Cost Industry

answer

Entry of new firms shifts the cost curves for all firms upward

question

Decreasing Cost industry

answer

Entry of new firms shifts the cost curves for all firms downward

question

Monopoly

answer

The least competitive market structure, characterized by a single producer, with no close substitutes, barriers to entry, and price making power

question

Market power

answer

The ability to set the price above the perfectly competitive level

question

Natural Monopoly

answer

The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand

question

Monopoly long-run equilibrium

answer

Pm > MR = MC, which is not allocatively efficient and dead weight loss exists. Pm > ATC, which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit

question

Price discrimination

answer

The practice of selling essentially the same good to different groups of consumers at different prices

question

Monopolistic competition

answer

A market structure characterized by a few small firms producing a differentiated product with easy entry into the market

question

Monopolistic competition long-run equilibrium

answer

Pmc minimum ATC so outcome is not efficient, but profit = 0.

question

Excess Capacity

answer

The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment

question

Oligopoly

answer

A very diverse market structure characterized by a small number of interdependent large firms, producing a standardized or differentiated product in a market with a barrier to entry

question

Four-firm concentration ratio

answer

A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly

question

Non-collusive oligopoly

answer

Models where firms are competitive rivals seeking to gain at the expense of their rivals

question

Collusive oligopoly

answer

Models where firms agree to mutually improve their situation

question

Cartel

answer

A group of firms that agree not to compete with each other on the basis of price, production, or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits

question

Marginal Revenue Product (MRP)

answer

Measures the value of what the next unit of a resource (e.g., labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market, MRPL = P x MPL. In a monopoly product market, MR < P so MRPm < MRPc.

question

Marginal Resource Cost (MRC)

answer

Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market, MRC = Wage. In a monopsony labor market, the MRC > Wage

question

Profit Maximizing Resource Employment

answer

The firm hires the profit maximizing amount of a resource at the point where MRP = MRC

question

Demand for Labor

answer

Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ∑MRPL of all firms

question

Derived Demand

answer

Demand for a resource like labor is derived from the demand for the goods produced by the resource

question

Determinants of Labor Demand

answer

Product demand, productivity, prices of other resources, and complementary resources

question

Least-Cost Rule

answer

The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK

question

Monopsonist

answer

A firm that has market power in the factor market (a wage-setter)

question

Private goods

answer

Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption

question

Public goods

answer

Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some, it is necessarily provided to all, even if they do not pay for that good

question

Free-Rider Problem

answer

In the case of a public good, some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it

question

Spillover benefits

answer

Additional benefits to society not captured by the market demand curve from the production of a good, result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good

question

Positive externality

answer

Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good

question

Spillover costs

answer

Additional costs to society not captured by the market supply curve from the production of a good, result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good

question

Negative externality

answer

Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good

question

Marginal Productivity Theory

answer

The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity

question

Marginal tax rate

answer

The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income

STUDY

Economics Factors Of Production Law Of Increasing Costs

Economics Chapter 1 Quiz Study Guide – Flashcards 32 terms

Rebecca Baker

32 terms

Preview

Economics Chapter 1 Quiz Study Guide – Flashcards

question

a situation that occurs when a producer cannot offer a particular good or service at the current price.

answer

Shortage

question

the effort that a person devotes to a task, for which the person is paid.

answer

Labor

question

physical objects such as baseballs or umbrellas.

answer

Goods

question

the study of how people make decisions to satisfy their needs and wants.

answer

Economics

question

What are the three factors of production?

answer

Land, labor, and capital

question

Building extra space in a factory to simplify production is an example of using ____ capital to save time and money.

answer

Physical

question

To what part of an industry does a worker's education contribute?

answer

Human capital

question

A person who starts an all-organic cleaning supplies business that employs others is an ____.

answer

Entrepreneur

question

What is the difference between a shortage and a scarcity?

answer

A shortage can be temporary or long-term, but scarcity always exists.

question

What does an economist mean by the term LAND?

answer

all natural resources used to produce goods and services

question

A ____ is giving up a benefit for a better one.

answer

Trade-off

question

The ____ is sacrifice you make for a better benefit.

answer

Opportunity cost

question

____ is finding the most efficient solution

answer

Thinking at the margin

question

The economic concept of ____ means that a government must decide whether to produce more or less military or consumer goods.

answer

Guns or Butter

question

If a person who wants to buy a CD has just enough money to buy one, and chooses CD A instead of CD B, then CD B is the ____.

answer

Opportunity cost

question

A decision-making grid is a visual way of ____.

answer

Making marginal decisions.

question

Every decision involves trade-offs because ____.

answer

Everyone's resources are limited.

question

A decision is made at the margin when each alternative considers where the most costly alternative will be. (...)

answer

...

question

The line in production possibility that connects the points.

answer

Frontier

question

Anything left of the frontier is ____.

answer

Underutilization

question

Anything right of the frontier is ____.

answer

Efficiency

question

the use of resources to produce the most goods and services.

answer

Efficiency

question

when an economy produces less that it should with its resources.

answer

Underutilization

question

the line on a graph that shows production possibilities of two goods.

answer

Production possibilities frontier

question

the idea that more resources are needed when production shifts to a second good.

answer

Law of increasing costs

question

an example of economic ineffciency

answer

Factory shutdown

question

What kinds of goods can be compared on a production possibilities curve?

answer

Any two categories of goods

question

What line on a production possibilities curve shows the amounts of goods produced?

answer

Production possibilities frontier

question

What happens when workers are laid off?

answer

Underutilization

question

What happens as production of one item switches to the production of another item?

answer

More resources are needed

question

Who is the founder of Under Armour?

answer

Kevin Plank

question

Who is the founder of Nike?

answer

Phil Knight

STUDY

Economics Law Of Increasing Costs

economics ch. 1 and 2 – Flashcards 151 terms

Jill Lopez

151 terms

Preview

economics ch. 1 and 2 – Flashcards

question

___ means that ppl cant acquire all of their wants so they must decide which wants are more important to them

answer

scarcity

question

3 factors of production

answer

land, labor, capital

question

something essential for survival

answer

need

question

something that ppl desire but that is not necessary for survival

answer

want

question

physical objects that someone produces

answer

goods

question

actions or activities that one person performs for another

answer

services

question

principle that limited amounts of goods and services are available to meet unlimited wants

answer

scarcity

question

study of how ppl seek to satisfy their needs and wants by making choices

answer

economics

question

a situation in which consumers want more of a good or service than producers are willing to make available at particular prices

answer

shortage

question

a person who decides how to combine resources to create goods and services

answer

entrepreneur

question

the resources that are used to make goods and services

answer

factors of production

question

all natural resources used to produce goods and services(water)

answer

land

question

the effort ppl devote to tasks for which they are paid

answer

labor

question

any human made resource that is used to produce other goods and services

answer

capital

question

the human made objects used to create other goods and services(dishwasher)

answer

physical capital

question

the knowledge and skills a worker gains through education and experience(school)

answer

human capital

question

ppl satisfy their needs and wants w __ and ___

answer

goods, services

question

peoples needs and wants are ___

answer

unlimited

question

goods and services are ___

answer

limited

question

play a key role in turning scarce resources into goods and services

answer

entrepreneurs

question

risk takers

answer

entrepreneurs

question

entrepreneurs are willing to take risks bc they will be rewarded through __

answer

profits

question

develop original ideas, start businesses, create new industries and fuel economic growth

answer

entrepreneurs

question

a entrepreneurs first task is to assemble the factors of production:

answer

land, labor, capital

question

refers to all natural resources used to produce goods and services

answer

land

question

these __ resources include oil, coal, iron, water, forests, fertile land

answer

land

question

effort ppl debote to tasks for which they are paid

answer

labor

question

labor includes: medical care provided by a __ classroom instruction provided by a __ tightening of a bolt by an assembly line worker creation of a painting by a artist repair of a television by a technician

answer

doctor, teacher

question

refers to any human made resource that is used to produce other goods and services

answer

capital

question

an economy requires both __ and ___ __ to produce goods and services

answer

physical, human capital

question

___ capital includes buildings, equipment and tools

answer

physical

question

__ capital includes a college education, training, job experience

answer

human

question

key factor of production bc ppl and companies can use it to save a great deal of time and money

answer

capital

question

benefits of capital include increase ___ , ___, ___, better __ management,

answer

efficiency, knowledge, productivity

question

the alternatives that we give up when we choose one course of action over another

answer

trade off

question

a phrase expressing the idea that a country that decides to produce more military goods has fewer resources to produce consumer goods and vice versa

answer

guns or butter

question

the most desirable alternative given up as the result of a decision

answer

opportunity cost

question

the process of deciding how much more or less to do

answer

thinking at the margin

question

the extra cost of adding a unit

answer

marginal cost

question

the extra benefit of adding a unit

answer

marginal benefit

question

__ ___ affects decision making bc when we make decisions about how to spend our scare resources like money or time, we are giving up the chance to spend that money or time on something else

answer

opportunity cost

question

all individuals, businesses, and large groups of ppl make decisions that involve __ __

answer

trade offs

question

__ __ involve things that can be easily measured such as money, property, and time or things that cant be easily measured, like enjoyment of job satisfaction

answer

trade offs

question

businesses make trade offs when they decide how to use their __ __ __

answer

factors of production

question

the most desirable alternative somebody gives up as a result of a decision is the __ __

answer

opportunity cost

question

every choice involves an opportunity cost bc we always face an opportunity cost. when we select one alternative, we must __ another.

answer

sacrifice

question

using a _ _ _ can help you decide if you are willing to accept the opportunity cost of a choice you are about to make

answer

decision making grid

question

deciding by thinking on the margin involves comparing the opportunity costs and benefits. this decision making process is called a

answer

cost/ benefit analysis

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a graph that shows alternative ways to use an economy's productive resources

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production possibilities curve

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a line on a production possibilities curve that shows the maximum possible output an economy can produce

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production possibilities frontier

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the use of resources in such a way as to maximize the output of goods and services

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efficiency

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the use of fewer resources than an economy is capable of using

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underutilization

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an economic principle which states that as production shifts from making one good or service to another, more and more resources are needed to increase production of the second good or service

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law of increasing costs

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how does a nation decide what and how to produce?

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production possibilities curve

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this curve helps a nations economists determine the alternative ways of using that nations resources (graph)

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production possibilities curve

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economists often use __ to analyze the choices and trade offs that ppl make

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graphs

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The line on a the curve that shows the maximum possible output an economy can produce is called the

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production possibilities frontier

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when an economy grows, the curve shifts to the ___

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right

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when an economy production capacity decreases, the economy slows and the curve shifts to the ___

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left

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production possibilities curves can be used to determine the __ __ involved in making an economic decision

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opportunity costs

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the structure of methods and principles that a society uses to produce and distribute goods and services

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economic system

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the income people receive in return for supplying factors of production

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factor payment

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the amount of money a business receives in excess of expenses

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profit

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a set of government programs that protect people who face unfavorable economic conditions

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safety net

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level of economic prosperity

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standard of living

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the process of bringing new methods, products or ideas into use

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innovation

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an economic system that relies on habit, custom, or ritual to decide the three key economic questions

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traditional economy

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what goods and services should be produced? each society must decide what to produce in order to satisfy the __ and __ of its ppl bc resources are __, each decision that a society makes about what to produce comes at an opportunity cost

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wants, needs, limited

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how should goods and services be produced? as a society decides how to produce its goods and services, it must consider how best to use its __, __ and __

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land, labor, capital

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who consumes goods and services? this is largely determined by how societies distribute __

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income

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who consumes goods and services? through __ __ , including __, societies can determine who will be the consumers of the goods and services produced

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factor payments, profits

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the oldest and simplest economic system is known as __ __

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traditional economy

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rely on habit, custom or ritual and revolve around the family. there is little room for innovation or change

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traditional economies

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some societies limit the economic___ of its ppl

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freedoms

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economic systems also strive to achieve a certain degree of economic __

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security

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if a society can accurately assess what to produce, it increases economic __

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efficiency

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economic __ is another economic goal that is defined differently in different societies. each society must decide how to divide its economic pie

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equity

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a society also strives for economic __. a nations economy must grow so i can provide jobs for the new ppl joing the workforce

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growth

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: any arrangement that allows buyers and sellers to exchange things

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market

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the concentration of the productive efforts of individuals and businesses on a limited number of activities

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specialization

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an economic system in which decisions on the three key economic questions are based on the voluntary exchange in markets

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free market economy

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a person or group living in a single residence

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household

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an organization that uses resources to produce a product or service, which it then sells

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firm

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the arena of exchange in which firms purchase the factors of production from households

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factor market

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the arena of exchange in which households purchase goods and services from firms

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product market

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an individual's own personal gain

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self interest

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the hope of reward or fear of penalty that encourages a person to behave a certain way*

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incentive

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the struggle among producers for the dollars of consumers

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competition

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a term coined by Adam Smith to describe the self-regulating nature of the marketplace

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invisible hand

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the powers of consumers to decide what gets produced

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consumer sovereignty

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characteristics of a free market economy: -__ and ___ __ and __ __ _-__ ___ economic freedom, effieciency and equity

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household, firms, factors, product markets, self interest, competition

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_ __ is the motivating force in the free market

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self interest

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despite the advantages of a free market economy, no country today operates under a pure, unregulated __ __

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free market

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an economic system in which the government makes all decisions on the three key economic questions

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centrally planned economy

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another name fora centrally planned economy

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command economy

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a range of economic and political systems based on the belief that wealth should be distributed evenly throughout society

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socialism

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a political system in which the gov owns and controls all resources and means of production and makes all economic decisions

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communism

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describing a form of gov which limits individual freedoms and requires strict obedience from their citizens

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authoritarian

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in a centrally planned economy( command economy), the gov owns both __ and __. the gov also controls where ppl work and what they are ___

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land, capital, paid

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the doctrine that government generally should not intervene in the marketplace

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laissez faire

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property that is owned by individuals or companies, not by the government or people as a whole

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private property

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a market-based economic system in which the government is involved to some extent

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mixed economy

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a period of change in which a nation moves from one economic system to another

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economic transition

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the process of selling businesses or services operated by the government to individual investors, and then allowing them to compete in the marketplace

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privatization

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an economic system in which investments in firms are made in a free market by private decision rather than by state control

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free enterprise system

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the american government intervenes i the economy by: providing vital__ keeping __ promoting general __

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services, order, welfare(SOW)

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from economics we learn that ppl have to make ___ when they are faced w limited ___

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choices, resources

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all ppl have __, which are things that are necessary to survive

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needs

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most ppl have ___, which are things that may improve their lives

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wants

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physical things that ppl produce are ___

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goods

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actions performed for a fee are ___

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services

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limited resources are the cause of ___

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scarcity

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a temporary low supply of an item is called a ___

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shortage

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an ___ brings together the factors of production to make new or improved goods or services

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entrepreneur

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natural resources such as oil and forests are included in the factor called __

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land

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the work ppl do is called ___ while buildings and tools are ___ capital

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labor, physical

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a workers skills are called __ capital

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human

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give up one thing for another is called a ___

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trade off

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the term 'guns or butter' refers to a trade off between military goods and ___ goods

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consumer

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the cost of the next best choice in a trade off is called the

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opportunity cost

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when you decide how much or more or less to do, u are -

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thinking at the margin

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to do a cost/benefit analysis, u must weigh the __ __ against the __ __

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marginal cost, marginal benefit

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a graph that shows alternative ways to sue resources is called a __ ___ __

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production possibilities curve

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___ means that an economy is using its resources in a way that produces the most goods and services

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efficiency

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when resources are available but not being used, an economy experiences ___

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underutilization

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the law of increasing costs say that opportunity costs increase when ___ switches from one item to another

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production

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the answer to the question " what should be __" tells where resources of a country will be used

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produced

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the question " ___ should things be produced " shows how ppl will use capital

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how

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the third question a society must answer is, " who should ___ what is produced "

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consume

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when the standard of living is improving, the countrys economy is ___

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growing

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economic ___ means a society doesnt waste its resources

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efficiency

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americans have economic ___ ans so can choose their own jobs

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freedom

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when a country tries to even out what its workers earn, it creates economic __, or fairness

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equity

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a __ economics system is based on what the country has done in the past

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traditional

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buyers and sellers have the freedom to make a ___ exchange or willing transfer

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voluntary

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___, or contest(struggle) between firms, helps keeps prices low

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competition

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lower prices provide consumers w an ___ to spend money

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incentive

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advantages of free market economies include: changing what is ___ when conditions change, ___ freedom, and ___ leading to economic growth

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produced, economic, competition

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the __ decides the answers to 3 basic economic questions

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government

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command economies are found in 2 political economic systems known as __ and ___

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socialism, communism

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bc there is little ___ there is little economic growth

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innovation

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both ___ and ___ make economic decisions

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riddles, profit

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ppl who believe in laissez faire dont want the __ __ __ to make economic decisions

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standard of living

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the US has a __ __ enterprise system, where most investment decisions are made by ___

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safety net, incentive

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the term 'guns or butter' refers to a trade off between military goods and ___ goods

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consumer

question

the cost of the next best choice in a trade off is called the

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opportunity cost

question

when you decide how much or more or less to do, u are -

answer

thinking at the margin

question

the term 'guns or butter' refers to a trade off between military goods and ___ goods

answer

consumer

question

the cost of the next best choice in a trade off is called the

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opportunity cost

question

when you decide how much or more or less to do, u are -

answer

thinking at the margin

question

the term 'guns or butter' refers to a trade off between military goods and ___ goods

answer

consumer

STUDY

Economics Law Of Increasing Costs

Economy: Chapter 2 – Flashcards 25 terms

Adrien Vincent

25 terms

Preview

Economy: Chapter 2 – Flashcards

question

Which is characteristic of a traditional economy? Communities tend to be fast-growing. They are usually based on light industrial production. They have a high standard of living. Children tend to have the same jobs as their parents did.

answer

Children tend to have the same jobs as their parents did.

question

Why does even a free market economy need some government intervention? to provide for things that the marketplace does not address to ensure that the government has the freedom to tax as necessary to make sure that the government can fulfill its needs for military personnel so that the government has some control over factor resources

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to provide for things that the marketplace does not address

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Select the term: One's own personal gain standard of living privatize economic system self-interest factor payments

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self-interest

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What is the function of an economic system? to make sure all people have equal access to goods to produce and distribute goods and services to give all producers the same access to consumers to make sure people are paid for their labor

answer

to produce and distribute goods and services

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What does the process of specialization do for an economy? It makes it more efficient. It eliminates unemployment. It fosters competition. It makes it easier to control.

answer

It makes it more efficient.

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Interpreting a Circular Flow Diagram: What does the complete diagram represent, the bottom half and the top half put together? business cycle in general the factor market circular flow in a free market economy household payments for the factors of production

answer

circular flow in a free market economy

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Select the term: The income people receive for supplying such things as land, labor, or capital standard of living privatize economic system self-interest factor payments

answer

factor payments

question

What is the purpose of competition? to act as a regulating force in the marketplace to cause producers to attempt to put each other out of business to cause buyers to have to be careful about spending their money to act as a motivating force behind the free market

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to act as a regulating force in the marketplace

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What is the key incentive that motivates a manufacturer to sell its products? making profits on sales pleasing the consumer putting others out of business popularity of the product

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making profits on sales

question

Select the term: A philosophy based on the belief that democratic means should be used to distribute wealth evenly throughout a society free enterprise traditional economy incentive safety net socialism

answer

socialism

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Which is not a key economic question? What goods and services should be produced? How should these goods and services be produced? Who consumes these goods and services? How should these goods and services be paid for?

answer

How should these goods and services be paid for?

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Select the term: Government programs that protect people experiencing unfavorable economic conditions free enterprise traditional economy incentive safety net socialism

answer

safety net

question

Select the term: To sell a state-run firm to individuals standard of living privatize economic system self-interest factor payments

answer

privatize

question

Which is not characteristic of a centrally planned economy? The central government owns all land and capital. The central government makes all economic decisions. Each collective or factory sets its own goals. Each person is assigned a job.

answer

Each collective or factory sets its own goals.

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Select the term: Level of economic prosperity standard of living privatize economic system self-interest factor payments

answer

standard of living

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How can the economy of China be characterized? free market centrally planned mixed, but on the side of centrally planned mixed, but on the side of free market

answer

mixed, but on the side of centrally planned

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What does the upper half of the diagram represent—the part marked 1? the product market the factor market the government flow of resources the flow of income

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the product market

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Select the term: An expectation that encourages people to behave in a certain way free enterprise traditional economy incentive safety net socialism

answer

incentive

question

Select the term: The method used by society to produce and distribute goods and services standard of living privatize economic system self-interest factor payments

answer

economic system

question

Select the term: An economic system that permits the conduct of business with minimal government intervention free enterprise traditional economy incentive safety net socialism

answer

free enterprise

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How can the economy of Canada be characterized? free market centrally planned mixed, but on the side of centrally planned mixed, but on the side of free market

answer

mixed, but on the side of free market

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What is an important advantage of a free market? It does not change unless the government directs it. It offers a wide variety of goods and services. It is easy to regulate. It protects the less fortunate.

answer

It offers a wide variety of goods and services.

question

Select the term: An economic system that relies on habit, custom, or ritual to decide questions of consumption and production of goods and services free enterprise traditional economy incentive safety net socialism

answer

traditional economy

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Which condition listed is the one that most people do not expect the safety net programs of government to provide for? injuries joblessness natural disasters low income

answer

low income

question

The struggle among various producers for the consumer's business called ____________ . socialism competition incentive self-regulation

answer

competition

STUDY

Economics Law Of Increasing Costs Principles Of Economics: Macroeconomics

Set A) The Foundations of the American Business System – Flashcards 56 terms

Killian Parsons

56 terms

Preview

Set A) The Foundations of the American Business System – Flashcards

question

business in a macro sense

answer

a social process involving the assembly and utilization of productive resources to produce products and services of satisfying societies needs and wants

question

business in a micro sense

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dedicated to profit-seeking activités that provide the goods and services that an economic system needs

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not-for-profit organization

answer

institutions with primary objectives other than returning profits to their owners of managers or fiduciary stewards

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risk-return tradeoff calculus

answer

maximization of shareholder wealth by striking a balance between the risk or threat of loss of a business investment and its potential gain

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social responsibility

answer

the ideal relationship between business and society

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accounting profit

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a companys earnings as formally reported

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return on investment

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a company's earnings after taking into account the cost of capital invested in the business

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cash-flow contribution

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a company's earnings before taking fixed-asset and capital costs into account

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shareholder

answer

stakeholders include managers and workers shareholders and other investors the consumeristic public and the general community

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social audit

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measures a company's record on issues such as affirmative action, environmental sensitivity, occupational safety and so on.

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corporate code of ethics

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the greatest good for the greatest number, the protection of human dignity, a fair distribution of burdens and benefits.

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ethical dilemma

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an issue has two conflicting but arguably valid sides

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ethical lapse

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the unethical decision or behavior of a business executive

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factors of production

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land (natural resources, building sites, forests, mineral deposits) labor (human resources) capital (financial- resources bus needs to finance operations in form of investment retained profits or loans, physical - elements used to produce goods and services like computers, robots, machines, tools and buildings)

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entrepreneurship

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the risk-taking function in a private enterprise system

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knowledge technology

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means to filter collected information and deliver it when needed, thus moving the business toward virtualization

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virtualization

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the eschewal of physical place when everything is accessible through technology

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learning organization and knowledge management

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effective leveraging and control of a firms knowledge assets

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strategic imagination

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fueled by logic-deductive reasoning of the sciences versus the contextual inferential reasoning used in the arts

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factors of production and their factor payments

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human resources: wages salaries entrepreneurship: profits capital: interest, dividends natural resources: rents information: intellectual capital digits

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planned (or command) economie

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an economy which relies on a centralized governmental apparatus to control all or most factors of production and to make all or most production and allocation decisions

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socialism

answer

popular term to describe economic system that draws its conceptual framework from writings of Karl Marx (particularly the book Das Kapital)`

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market economy

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an economy in which individuals control production and allocation decisions through the interaction of forces of demand and supply governed by the law of supply and demand

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law of demand

answer

buyers will purchase (demand) more of a product for sale as its price drops and less of a product as its price increases

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law of supply

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producers will offer (supply) more of a product for sale as its price rises and less as its price drops

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capitaalism

answer

philosophical origin from 18th central writings of Adam Smith (particularly the book The Wealth of Nations)

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pure capitalism

answer

market with supply & demand, and invisible hand (ensure production of goods society wants in quantities society wants it)

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invisible hand

answer

ensure production of goods society wants in quantities society wants it

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mixed capitalism

answer

wealth generated by individuals and businesses but an intercessionary government plays some role and include both a fiscal and monetary policy

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fiscal policy

answer

use of government revenue collection and spending

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monetary policy

answer

adjustments to nations money supply by increasing or decreasing interest rates

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profits

answer

after tax profit is the legitimate reward for the investment, effort, and risk-taking of those persons who provide the goods and services the public needs

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the three freedom of choices

answer

- freedom to choose a type of business, freedom to choose clientele and customer base, freedom to combine the factors of production in a lawful way in any manner to maximize profits - freedom to choose employment and with companies that offer the most incentivizing careers

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competition

answer

the confrontation b/w two or more businesses vying for the same resources and consumers

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pure competition

answer

market situation in which two conditions prevail, 1) all firms in a given industry are small in scale and restricted in scope 2) the number of firms in the industry must be large, ergo no single firm is powerful enough to influence the price of the product or service in the marketplace

question

4 principles of pure competition

answer

1) products offered by each firm are so similar that buyers view them as identical 2) transparency or the factor that buyers and sellers know the prices that others are paying and receiving in the marketplace

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monopolistic competition

answer

market situation in which sellers are able to achieve some measure of product differentiation through branding, advertising, creativity, quality improvements, service response time etc.

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oligopoly

answer

market situation featuring a finite number of large producers offering either similar products or dissimilar products

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monopoly

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a market situation which features a single firm with no competition and only constrained by the fall of consumer demand in response to increased prices

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natural monopolies (examples)

answer

electricity, natural gas

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GNP (gross national product)

answer

the total value of all the goods and services produced by an economic system in a one-year period irrespective of where the factors of production are located *includes both domestic and international profits*

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real GNP

answer

when GNP is adjusted for inflation and changes in the value of a countries currency

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GDP (gross domestic product)

answer

another calculation of the value of all goods and services produced in the economy during a given period of time, usually a year *includes only domestic (in USA) profits*

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productivity

answer

a measure of economy growth that compares how much a system produces with the resources to produce it

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total productivity equation

answer

total productivity = output (goods & services produced) / input (human & natural resources, capital)

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balance of trade

answer

the difference between a country exports to and imports from other countries

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positive balance of trade

answer

generally considered favorable because new money flows into a country from the sales of its exports

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negative balance

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means that money is flowing out to pay for imports

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national debt

answer

the total amount that a nation owes its creditors, usually the result of a number of budget deficits in which a government has spent more money than it raises in revenues

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strategic leadership approach

answer

progression of dominant managerial logistics as the strategic drivers of the American business system

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the production dominant managerial logic

answer

- 1870 to 1900 - a period of industrialization and production - believes that a product will sell itself

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the financial dominant managerial logic

answer

- 1900 to 1914 - deals with mergers and acquisitions - finance was the driver of this period

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the sales dominant managerial logic

answer

- 1920's - an era of durable goods revolution - sales is a mission-driven skill that gives you a competitive advantage - sales and advertisements were huge

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the marketing dominant managerial logic

answer

- 1950's - gave marketing product development - Edsel example (biggest loser, car didn't sell itself) - anthropic cosmological principle bc it decenters business universe of this time (companies used to be the true center of the business universe and Edsel was the last example of this)

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the strategy dominant managerial logic

answer

- 1970's - period of the coming of strategy (competitors were taken into consideration) - there were technological, cultural, and societal changes

question

the meta-strategic dominant managerial logic

answer

- 1990's - viral competition - there are changes in the share of customer and market (greater does not always mean more profit)

STUDY

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