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26 Cards in this Set
- Front
- Back
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Economics is the study of how to use what? |
Limited resources to satisfy unlimited wants as completely as possible |
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Which of the following is an example of macroeconomic analysis? |
A study of the factors that influence the overall unemployment rate |
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What are the four categories of economic resources? |
Labor, capital, entrepreneurship, and land |
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In economics the term capital as a resource means |
Machinery and other human made aids to production |
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Which of the following is not an economic resource? |
Money |
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The term "ceteris paribus" means |
Other things being equal or constant |
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A production possibilities curve shows |
The combinations of two products that an economy is capable of producing with its finite resource stock |
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A nations production possibilities curve is constructed under the assumption that |
The economy's resource stock is fixed or unchanged |
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If an economy is operating on its production possibilities curve for consumer goods and capital goods |
It can only produce more consumer goods if it produces fewer capital goods |
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If society is operating inside its production possibilities curve for guns and butter then… |
Some economic resources are unemployed |
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An economy's production possibilities curve would shift outward as a result of |
A resource saving advance in production technology |
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According to the law of increasing opportunity costs |
If a society desires more of some particular product, it must sacrifice larger and larger amounts of other products |
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Trade with other nations can make it possible for a country to… |
Operate outside its production possibilities curve |
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If a nation could produce 350 units of civilian goods and 200 units of military goods or 300 units of civilian goods and 300 units of military goods… |
The opportunity cost of 100 units of military goods is 50 units a civilian goods |
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What are the ten principles in ch 1? |
1. People face trade-offs 2. The cost of some thing is what you give up to get it 3. Rational people think at the margin 4. People respond to incentives 5. Trade can make everyone better off 6. Markets are usually a good way to organize economic activity 7. Governments can sometimes improve market outcomes 8. A country standard of living depends on its ability to produce goods and services 9. Prices rise from the government prints too much money 10. Society faces a short run trade-off between inflation and unemployment |
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What is productivity |
The quantity of goods and services produced from each unit of labor input |
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What is inflation |
And increase in the overall level of prices in the economy |
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What is opportunity cost? |
Whatever must be given up to obtain some item or what you give up to get that item |
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What is marginal change? |
A small incremental adjustment to a plan of action |
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Rational people often make decisions by comparing: |
Marginal benefit and marginal cost |
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Trade between two countries can make each country better off. Trade allows: |
Each persons to specialize in the activity she does best |
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What is a market economy? |
An economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services |
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What are property rights? |
The ability of an individual to own and exercise control over scarce resources |
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What are two broad rationales for governments to intervene? |
To promote efficiency or to promote equality |
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What is market failure? |
A situation in which a market left on its own fails to allocate resources efficiently |
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What is market power? |
The ability of a single economic actor to have substantial influence on market prices |
