question
Microeconomics
answer
is the study of decision making by individual economic agents (Örms, households) allocating scarce resources to satisfy needs and wants.
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Diamond (water paradox)
answer
trapped in a diamond mine with no water, the relatively precious diamond is in abundance and less in demand compared to life saving water!
question
Although freshwater is very abundant in most places, it is scarce because:
a. it has no alternative uses.
b. there is not enough of it to meet all needs.
c. it is a free good.
d. scarce goods in general are not all that costly.
a. it has no alternative uses.
b. there is not enough of it to meet all needs.
c. it is a free good.
d. scarce goods in general are not all that costly.
answer
answer is b
question
A resource:
answer
is anything that can be used in the production of something else.(Land, Labor and capital.)
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what is labor?
answer
hours worked by people
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Physical capital
answer
machines, buildings and other man-made productive assets.
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Human capital
answer
educational acheivement and skills of workers.
question
Which factor can BEST be considered to be a resource used in the production of computers?
a. money from investors.
b. wages of computer engineers.
c. computer engineers.
d. taxes on the proÖts from the sale of the computers
a. money from investors.
b. wages of computer engineers.
c. computer engineers.
d. taxes on the proÖts from the sale of the computers
answer
answer is C because computer engineers are laborers
question
What is the true cost of acquiring something?
answer
The true cost of acquiring an item you want is what you must give up to get what you want.
question
You can spend $100 on either a new economics textbook or a new tablet computer. If you choose to buy the new economics textbook, the opportunity cost is:
a. $100.
b. your enjoyment of the new tablet computer.
c. both the $100 and your enjoyment of the new tablet computer.
d. impossible to determine.
a. $100.
b. your enjoyment of the new tablet computer.
c. both the $100 and your enjoyment of the new tablet computer.
d. impossible to determine.
answer
Opportunity cost is value of what you have sacriÖced, the value of the next best alternative ñif you did not buy the textbook, you would have bought the tablet. So what you have sacriÖced is the enjoyment from the new tablet; choice (b).
question
While buying refreshments for an upcoming party, you notice that a six-pack of Americana Beer costs $2 and a six-pack of Bavarian Beer costs $4. You buy the six-pack of Bavarian Beer, although you wonder if maybe two six-packs of Americana Beer would have been a better choice. The opportunity cost of the Bavarian Beer is:
a. $4.
b. a six-pack of Americana Beer.
c. two six-packs of Americana Beer.
d. $4 and the six-pack of Americana Beer.
a. $4.
b. a six-pack of Americana Beer.
c. two six-packs of Americana Beer.
d. $4 and the six-pack of Americana Beer.
answer
C is the correct one
question
MARGINAL DECISIONS
answer
Decisions about whether to do a bit more or a bit less of an activity
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Marginal analysis
answer
the study of such decisions
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Thinking in economic terms, when Mary Sweet-Tooth is deciding whether to eat another brownie, she:
a. considers only the price of the brownie.
b. considers only how much additional exercise she will need to do to work o§ the calories associated with eating another brownie.
c. compares all of the beneÖts and costs of eating another brownie.
d. considers whether she can do so without anyone else noticing.
a. considers only the price of the brownie.
b. considers only how much additional exercise she will need to do to work o§ the calories associated with eating another brownie.
c. compares all of the beneÖts and costs of eating another brownie.
d. considers whether she can do so without anyone else noticing.
answer
The statement "... you wonder if maybe two six-packs of Americana Beer would have been a better choice" is a hint that the next best alternative to your purchase is the purchase of two six packs of Americana beer.
Hence, (c) is the correct choice.
Hence, (c) is the correct choice.
question
You are planning to study eight hours this week for your economics Önal and are considering studying a ninth hour. You should:
a. compare the beneÖts of one more hour of study with the cost of one less hour of sleep.
b. compare the beneÖts of one more hour of study with the cost of one less hour of studying calculus
.c. compare the beneÖts of one more hour of study with the cost of one less hour of work at your part-time job.
d. make your decision based on the cost of the next best alternative use of your time compared to the beneÖt of one more hour of study.
a. compare the beneÖts of one more hour of study with the cost of one less hour of sleep.
b. compare the beneÖts of one more hour of study with the cost of one less hour of studying calculus
.c. compare the beneÖts of one more hour of study with the cost of one less hour of work at your part-time job.
d. make your decision based on the cost of the next best alternative use of your time compared to the beneÖt of one more hour of study.
answer
Combine marginal thinking and opportunity cost.
Marginal decision tells you that you need to make the decision by comparing beneÖts from that extra hour and the cost.
True cost of the additional spent is the opportunity cost.
Hence, (d) is the correct choice.
Marginal decision tells you that you need to make the decision by comparing beneÖts from that extra hour and the cost.
True cost of the additional spent is the opportunity cost.
Hence, (d) is the correct choice.
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Economy
answer
that kind of system is what we mean when we talk
question
economics
answer
social science that studies the production, distribution, consumption of goods and services
question
Microeconomics
answer
study of how individuals make decisions and how these decisions interact
question
invisible Hand
answer
A phrase used by Adam Smith to refer to the way in which an individuals pursuit of self interest can lead, without the individual intending it, to good results for society as a whole
question
market economy
answer
An economy in which decisions about production and consumption are made by individual producers and consumers.
question
what two things have gotten bad or worse?
answer
traffic congestion which is an example of a market failure and air quality/pollution
question
Recessions
answer
a downturn in the economy
question
China is a big source of what demand?
answer
raw materials
question
Market failure?
answer
the failure of a market to be efficient
question
Marcoeconomics
answer
the branch of economics that Is concerned with the overall ups and downs in the economy
question
Economic growth
answer
the growing ability of the economy to produce goods and services
question
Economic interaction
answer
how my choices affect your choices and vice versa
question
Individual choice:
answer
decisions by individuals about what to do, which necessarily involve decisions about what not to do
question
What are the four principles of individual choice?
answer
1) Choices are necessary because resources are scarce
2) The true cost of something is its opportunity cost
3)"How much" is a decision at the margin
4)People usually respond to incentives, exploiting opportunities to make themselves better off
2) The true cost of something is its opportunity cost
3)"How much" is a decision at the margin
4)People usually respond to incentives, exploiting opportunities to make themselves better off
question
Trade-off
answer
a comparison of costs and benefits of doing something
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Specialization
answer
in which each person specializes in the task that he or she is good at performing
question
Trade
answer
individuals provide goods and services to others and receive goods and services in return
question
Adam Smith? what did he write?
answer
"The Wealth of Nations"
- beginning of economics as a disciple
- beginning of economics as a disciple
question
What are the principles of interaction of individual choices?
answer
1) There are gains from trade
2) Markets move toward equilibrium
3)Resources should be used
4) Markets usually lead to efficiency
2) Markets move toward equilibrium
3)Resources should be used
4) Markets usually lead to efficiency
question
What are the 3 principles of economy/wide interactions?
answer
1) one persons spending is another persons income
2) overall spending sometimes gets out of line with the economys productive capacity
3)government policies change ( can make taxes more or less expensive)
2) overall spending sometimes gets out of line with the economys productive capacity
3)government policies change ( can make taxes more or less expensive)
question
macroeconomic policy
answer
Government spending, taxes, and control of money
question
Diamond-Water Paradox
answer
trapped in a diamond mine with no water, the relatively precious diamond is in abundance and less in demand compared to life saving water
question
Diamond-Water Paradox
answer
The observation that things with the greatest value in use sometimes have little value in exchange and things with little value in use sometimes have the greatest value in exchange.
question
My army one source.com
answer
- economy where people buy or sell babysitting services
- economics suffer from too little spending
- not enough people will go out
- economics suffer from too little spending
- not enough people will go out
question
Equity
answer
everyone gets his or her fair share
question
incentives
answer
anything that offers rewards to people who change their behavior.
question
Equity
answer
a condition in which everyone gets his or her "fair share." (There are many definitions of equity.)
question
opportunity cost
answer
what you must give up in order to get something.(Mark Zuckerberg understood the concept of opportunity cost - and dropped out of Harvard.)
question
Model:
answer
: a simplified representation of a real situation that is used to better understand real-life situations.
question
Other things equal assumption:
answer
all other relevant factors remain unchanged.
question
What are the three simple models?
answer
the production possibility frontier, comparative advantage, and the circular-flow diagram
question
What is a PPF?
answer
PPF is a diagram that shows the combinationsof two goods that are possible for a society to produce at full employment.
question
How can we use the PPF model to answer questions?
answer
-How much can we produce?
-What will it cost us to change our mix of production?
-Does it make sense to import the good from somewhere else?
-What will it cost us to change our mix of production?
-Does it make sense to import the good from somewhere else?
question
What causes economic growth?
answer
1.An increase in factors of production: resources used to produce goods and services.
2.Better technology: the technical means for producing goods and services.
2.Better technology: the technical means for producing goods and services.
question
What does land include?
answer
Land includes natural resources such as mineral deposits, oil, natural gas, water, and actual land acreage
question
what is physical capital?
answer
3.Physical capital is manufactured items used to produce other goods and services.
question
Human capital:
answer
is the educational achievements and skills of the labor force (which increase labor productivity).
question
Individual and country comparative advantage
answer
•A country has a comparative advantage in producing a good or service if its opportunity cost of producing the good or service is lower than for other countries.
•An individual has a comparative advantage in producing a good or service if his or her opportunity cost of producing the good or service is lower than for other people.
•An individual has a comparative advantage in producing a good or service if his or her opportunity cost of producing the good or service is lower than for other people.
question
What is a firm?
answer
firm is an organization that produces goods and services for sale.
question
What is a household?
answer
is a person or a group of people that share their income.
question
What is a circular Flow diagram?
answer
represents the transactions in an economy by flows around a circle.
question
Income distribution
answer
the way in which total income is divided among the owners of the various factors of production.
question
Positive economics
answer
•is the branch of economic analysis that describes the way the economy actually works.
question
Normative economics
answer
•makes prescriptions about the way the economy should work.
question
forecast
answer
a simple prediction of the future
question
what is positive/negative economics about?
answer
•Positive economics is about description;normative economics is about prescription.
question
•Label each of the following statements as normative (a) or positive (b):
1.More than 60% of women are in the labor market.
2.Rent control laws should be implemented because they help to achieve equity or fairness in housing.
3.Society should take measures to end gun violence.
4.People who smoke pass on increased medical costs to the whole society.
5.Single mothers are more than twice as likely as married mothers to be in poverty.
1.More than 60% of women are in the labor market.
2.Rent control laws should be implemented because they help to achieve equity or fairness in housing.
3.Society should take measures to end gun violence.
4.People who smoke pass on increased medical costs to the whole society.
5.Single mothers are more than twice as likely as married mothers to be in poverty.
answer
•Label each of the following statements as normative (a) or positive (b):
1.More than 60% of women are in the labor market. (positive (b))
2.Rent control laws should be implemented because they help to achieve equity or fairness in housing. (normative (a))
3.Society should take measures to end gun violence. (normative (a))
4.People who smoke pass on increased medical costs to the whole society. (positive (b))
5.Single mothers are more than twice as likely as married mothers to be in poverty. (positive (b))
1.More than 60% of women are in the labor market. (positive (b))
2.Rent control laws should be implemented because they help to achieve equity or fairness in housing. (normative (a))
3.Society should take measures to end gun violence. (normative (a))
4.People who smoke pass on increased medical costs to the whole society. (positive (b))
5.Single mothers are more than twice as likely as married mothers to be in poverty. (positive (b))
question
Suppose that in Australia, it takes 2 hours to harvest 10 bushels of apples and 4 hours to harvest 10 bushels of tomatoes. Suppose a worker in Brazil can harvest 10 bushels of apples in 4 hours or 10 bushels of tomatoes in 5 hours. Which of these statements is TRUE?
a. Brazil has a comparative advantage in producing tomatoes.b. Brazil has a comparative advantage in producing apples.c. Brazil has an absolute advantage in producing both goods.d. In trade between these two countries, Australia would gain and Brazil would los
a. Brazil has a comparative advantage in producing tomatoes.b. Brazil has a comparative advantage in producing apples.c. Brazil has an absolute advantage in producing both goods.d. In trade between these two countries, Australia would gain and Brazil would los
answer
a. Brazil has a comparative advantage in producing tomatoes.
question
Which factor would result in a movement along the demand curve? a. a change in preferencesb. an increase in the number of buyersc. an increase in the number of suppliers
d. a decrease in income
d. a decrease in income
answer
c. an increase in the number of suppliers. (increase in supply, leads to a rightward shift of the supply curve and a movement along the demand curve)
question
An increase in the price of hamburger would probably result in _____ in the demand for hamburger buns.a. a decreaseb. an increase
c. no changed. random áuctuations
c. no changed. random áuctuations
answer
Hamburgers and hamburger buns are complements.
Price increase of hamburgers will lead to reduction in the quantity demanded of hamburgers, which leads to decrease in demand for buns, that is at every price the demand for buns fall (note that this is a shift of the demand curve for buns).
So, choice a is correct.
Price increase of hamburgers will lead to reduction in the quantity demanded of hamburgers, which leads to decrease in demand for buns, that is at every price the demand for buns fall (note that this is a shift of the demand curve for buns).
So, choice a is correct.
question
normative economics
answer
makes prescriptions about the way the economy should work
question
positive economics
answer
the branch of economics analysis that describes the way the economy works
question
comparative advantage
answer
produce things you're good at; buy everything else from others ; is about OC
question
absolute advantage
answer
has nothing to do with OC advantage ; the ability to produce more because of more resources ; leads to more output
question
surplus
answer
when the quantity supplied exceeds the quantity demanded
question
Equilibrium
answer
Qs = Qd at a certain price
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