Intro to Microeconomics - Part 2 - Assignment Essays %

question

normative economic statement

answer

a statement that reflects an opinion, which cannot be proved or disproved by reference to the facts

question

association-is-causation fallacy

answer

the incorrect idea that if two variables are associated in time, one must necessarily cause the other

question

fallacy of composition

answer

the incorrect belief that what is true for the individual, or part, must necessarily be true for the group, or the whole

question

secondary effects

answer

unintended consequences or economic actions that may develop slowly over time a people react to the events

question

the scarcity principle

answer

"no free lunch" principle - someone always ends up paying for it

question

cost-benefit analysis

answer

an action should only be taken if the benefit exceeds its cost - class size, walking downtown to buy a computer game

question

opportunity cost

answer

the value of what must be forgone to undertake an activity - time of trip, movie vs. nap

question

marginal cost

answer

the increase in total cost that results from carrying out one more unit of an activity

question

marginal benefit

answer

the increase in total benefit that results from carrying out one additional unit of an activity

question

law of comparative advantage

answer

the individual, firm, region, or country, with the lowest opportunity cost of producing a particular good should specialize in that good

question

absolute advantage

answer

the ability to make something using fewer resources that other producers use
- Adam Smith - Wealth of Nations 1776
- Laissez-Faire, Theory of the Invisible Hand, Devision of Labor

question

comparative advantage

answer

the ability to make something at a lower opportunity cost than other producers face

question

barter

answer

the direct exchange of one good for another without using money

question

division of labor

answer

breaking down the production of a good into separate tasks (increases productivity)

question

specialization of labor

answer

workers specialize at a task in the production process at which they are most efficient

question

the production possibilities frontier

answer

a curve showing alternative combinations of goods that can be produced when available resources are used efficiently

question

efficiency

answer

the condition that exists when there is no way resources can be reallocated to increase the production of one good w/o decreasing the production of another good (any point inside the PPF)

question

inefficiency

answer

when resources are not employed efficiently

question

unattainable

answer

cannot be achieved with the existing resources, technology, human capital, and/or rules of the game (any point outside the PPF)

question

law of increasing opportunity cost

answer

to produce each additional increment of a good, a successively larger increment of an alternative good must be sacrificed if the economy resources are already being used efficiently

question

economic growth

answer

an increase in the economy's ability to produce goods and services; an upward shift of the production possibilities frontier

question

economic system

answer

a set of mechanisms and institutions that resolve what, how, and for whom questions

question

pure capitalism

answer

an econ system characterized by the private ownership of resources and the use of prices to coordinate economic activity in unregulated markets

question

mixed economy

answer

an econ stystem characterized by the private ownership of some resources and the public ownership of other resources; some markets are regulated, some aren't

question

pure command system

answer

characterized by the public ownership of resources and centralized planning - ex: north korea

question

command economies

answer

communism or dictatorships

question

utility

answer

satisfaction received from consumption

question

transfer payments

answer

cash or in-kind benefits given to individuals as outright grants from the government

question

industrial revolution

answer

developments of large-scale factory production that began in great britian around 1750 and spread to europe, NA, and australia

question

firms

answer

economic units formed by profit seeking entrepreneurs who use resources to produce goods and services for sale

1 of 30

question

normative economic statement

answer

a statement that reflects an opinion, which cannot be proved or disproved by reference to the facts

question

association-is-causation fallacy

answer

the incorrect idea that if two variables are associated in time, one must necessarily cause the other

question

fallacy of composition

answer

the incorrect belief that what is true for the individual, or part, must necessarily be true for the group, or the whole

question

secondary effects

answer

unintended consequences or economic actions that may develop slowly over time a people react to the events

question

the scarcity principle

answer

"no free lunch" principle - someone always ends up paying for it

question

cost-benefit analysis

answer

an action should only be taken if the benefit exceeds its cost - class size, walking downtown to buy a computer game

question

opportunity cost

answer

the value of what must be forgone to undertake an activity - time of trip, movie vs. nap

question

marginal cost

answer

the increase in total cost that results from carrying out one more unit of an activity

question

marginal benefit

answer

the increase in total benefit that results from carrying out one additional unit of an activity

question

law of comparative advantage

answer

the individual, firm, region, or country, with the lowest opportunity cost of producing a particular good should specialize in that good

question

absolute advantage

answer

the ability to make something using fewer resources that other producers use
- Adam Smith - Wealth of Nations 1776
- Laissez-Faire, Theory of the Invisible Hand, Devision of Labor

question

comparative advantage

answer

the ability to make something at a lower opportunity cost than other producers face

question

barter

answer

the direct exchange of one good for another without using money

question

division of labor

answer

breaking down the production of a good into separate tasks (increases productivity)

question

specialization of labor

answer

workers specialize at a task in the production process at which they are most efficient

question

the production possibilities frontier

answer

a curve showing alternative combinations of goods that can be produced when available resources are used efficiently

question

efficiency

answer

the condition that exists when there is no way resources can be reallocated to increase the production of one good w/o decreasing the production of another good (any point inside the PPF)

question

inefficiency

answer

when resources are not employed efficiently

question

unattainable

answer

cannot be achieved with the existing resources, technology, human capital, and/or rules of the game (any point outside the PPF)

question

law of increasing opportunity cost

answer

to produce each additional increment of a good, a successively larger increment of an alternative good must be sacrificed if the economy resources are already being used efficiently

question

economic growth

answer

an increase in the economy's ability to produce goods and services; an upward shift of the production possibilities frontier

question

economic system

answer

a set of mechanisms and institutions that resolve what, how, and for whom questions

question

pure capitalism

answer

an econ system characterized by the private ownership of resources and the use of prices to coordinate economic activity in unregulated markets

question

mixed economy

answer

an econ stystem characterized by the private ownership of some resources and the public ownership of other resources; some markets are regulated, some aren't

question

pure command system

answer

characterized by the public ownership of resources and centralized planning - ex: north korea

question

command economies

answer

communism or dictatorships

question

utility

answer

satisfaction received from consumption

question

transfer payments

answer

cash or in-kind benefits given to individuals as outright grants from the government

question

industrial revolution

answer

developments of large-scale factory production that began in great britian around 1750 and spread to europe, NA, and australia

question

firms

answer

economic units formed by profit seeking entrepreneurs who use resources to produce goods and services for sale

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Intro to Microeconomics – Part 2

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