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ECON202 > Ch 1-3 > Flashcards

Ch 1-3 Flashcards

1
Q
  • a situation in which the amount of something available is insufficient to satisfy the desire for it
A

Scarcity

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2
Q
  • what is given up when taking an action or making a choice
A

Opportunity Cost

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3
Q
  • the dollars sacrificed, and actually paid out, for a choice
A

DEFN: Explicit Cost

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4
Q
  • the value of something sacrificed when no direct payment is made
A

DEFN: implicit cost

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5
Q

What is the relationship between opportunity cost, explicit cost, and implicit cost?

A

opportunity cost = explicit cost + implicit cost

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6
Q
  • the labor, land, capital, and entrepreneurship that are used to produce goods and services
A

DEFN: resources

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7
Q
  • the time human beings spend producing goods and services
A

DEFN: labor

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8
Q

What are the (4) four economic resources?

A
  • labor
  • capital
  • land
  • entrepreneurship
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9
Q
  • a long-lasting tool that is used to produce other goods
A

DEFN: capital

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10
Q
  • physical stock like machinery, equipment, and factories;

- long-lasting things that help with the production of goods and services

A

DEFN: physical capital

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11
Q
  • the skills and training of the labor force
A

human capital

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12
Q
  • the total amount of capital in a nation that is productively useful at a particular point in time
A

DEFN: capital stock

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13
Q
  • the physical space on which production takes place, as well as the nature resources that come with it
A

DEFN: land

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14
Q
  • the ability and willingness to combine the other resources
A

DEFN: entrepreneurship

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15
Q
  • anything, including a resource, used to produce a good or service
A

DEFN: inputs

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16
Q
  • the study of the behavior of individual households, firms, and governments; analyzes individual parts of the economy rather than the whole
A

DEFN: microeconomics

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17
Q

-study of the behavior of the overall economy; looks at total economic output of an economy

A

DEFN: macroeconomics

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18
Q
  • study of how an economy works; can be tested using facts
A

DEFN: positive economics

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19
Q
  • the practice of recommending policies to solve economic problems
    > goes beyond just facts
    > requires a judgment be made by the individual making the statement and depends on individual’s values
    ** cannot be proved/disproved by facts alone
A

DEFN: normative economics

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20
Q
  • an abstract representation of reality
A

DEFN: model

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21
Q
  • any assumption that makes a model simpler without affecting any of its important conclusions
A

DEFN: simplifying assumptions

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22
Q
  • assumptions that affect the conclusions of a model in an important way
    > always one or more in an economic model
A

DEFN: critical assumptions

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23
Q

What does opportunity cost arise from?

A
  • scarcity of resources

- to produce more of one thing, society must shift resources away from producing something else

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24
Q

A curve showing all combinations of two goods that can be produced with the resources and technology currently available

A

Defn: production possibilities frontier (PPF)

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25
Q

What is a point outside the PPF given current technology and resources at an economy’s disposal?

A

Unattainable

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26
Q

Where are societies choices limited to with regard to the PPF?

A

On or Inside the PPF

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27
Q

What does the Law of Increasing Opportunity Cost state?

A

The more of something produced, the greater the opportunity cost of producing even more of it.

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28
Q

What is the shape of the PPF? What causes that shape?

A

The shape is concave. It is caused by the Law of Increasing Opportunity Cost.

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29
Q

What is the ultimate cause (regarding resources) that explains the Law of Increasing Opportunity Cost?

A

Because most resources - by their nature - are better suited to some purposes than to others.

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30
Q

What can cause an economy to operate inside of the PPF?

A

Inefficient use of resources.

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31
Q

_________________ ________________ is when a firm, an industry, or an entire economy could produce more of at least one good without producing less of any other good.

A

Productive inefficiency

32
Q

A slow down in overall economic activity.

A

Defn: recession

33
Q

How is “technological change” depicted in economic terms?

A

The discovery of new ways to produce more from a given quantity of resources.

34
Q

What are two (2) things that can cause economic growth?

A
  1. technological change

2. an increase in resources

35
Q

What two (2) roles does Capital play in an economy?

A
  1. It is a resource used to produce goods and services

2. It is ITSELF a good and is produced using resources

36
Q

In order to produce more goods and services in the future, one must shift resources __________ (toward/away) R&D and ________ ____________, and _________ (toward/away) from producing things one can use at the immediate moment.

A
  • toward
  • capital production
  • away
37
Q

Defn: The way an economy is organized.

A

economic systems

38
Q

Can a society become economically self-sufficient?

A

No

39
Q

What are two (2) features that every society’s economic system possesses?

A
  1. specialization

2. exchange

40
Q

Defn: A method of production in which each person concentrates on a limited number of activities.

A

specialization

41
Q

The act of trading with others to obtain what one desires is called _________.

A

exchange

42
Q

Specialization and exchange enable individuals to enjoy greater ___________ and higher ________ ___________ than would otherwise be possible.

A
  • production

- living standards

43
Q

What are three (3) benefits of specialization in an economy?

A
  1. Development of expertise
  2. Minimizes production downtime
  3. Benefits from Comparative Advantage
44
Q

The ability to produce a good or service at a lower opportunity cost than other producers.

A

Comparative Advantage

45
Q

The ability to produce a good or service using fewer resources than other producers use.

A

Absolute Advantage

46
Q

______ production of every good and service will be ________ when individuals specialize according to their _________ _____________.

A
  • Total
  • greatest
  • comparative advantage
47
Q

Economic systems solve what problem?

A

The problem of resource allocation.

48
Q

An economy in which resources are allocated according to long-lived practices from the past.

A

Traditional Economy

49
Q

An economic system in which resources are allocated according to explicit instructions from a central authority.

A

Command Economy

50
Q

An economic system in which resources are allocated through individual decision making.

A

Market Economy

51
Q

What are the three (3) types of economic systems?

A
  1. Traditional Economy
  2. Command Economy
  3. Market Economy
52
Q

A group of buyers and sellers with the potential to trade with each other

A

Market

53
Q

The amount of money that must be paid to a seller to obtain a good or service.

A

Price

54
Q

Is price the same as cost?

A

No

55
Q

Markets help to create a sensible ________ of ________.

A

Allocation of resources

56
Q

An economic system in which most resources are owned by private citizens, who are free to sell or rent them to others as they wish is defined as?

A

Capitalism

57
Q

An economic system in which most resources are owned by the state is called:

A

Socialism

58
Q

How should an economy determine what good it should specialize in and what good it trade for?

A

Specialize in the good it has a comparative advantage in producing and trade for others.

59
Q

What three (3) questions has to be answered in order to determine how resources are to be used?

A
  1. Which goods and services should be produced with society’s resources.
  2. How should they be produced?
  3. Who should get them?
60
Q

How does the price of a good differ from its “cost”?

A

Cost means “opportunity cost” while price is a mechanism that confronts individuals with the costs of their decisions.

61
Q

A market economy in which the government also plays an important role in allocating resources is called:

A

A mixed economy

62
Q

_________ and __________ is an economic model that is designed to explain how prices are determined in certain types of markets.

A

Supply and Demand

63
Q

What are two (2) types of ways a market can be characterized?

A
  1. Broad (macroeconomics)

2. Narrow (microeconomics)

64
Q

The amount of a good or service that consumers are willing and able to purchase at a given price, all else held constant.

A

Quantity Demanded

65
Q

As price rises quantity demanded will decrease. As a price falls the quantity demanded will increase.
This is called?

A

Law of Demand

66
Q

The quantities that a good or service that consumers are willing and able to purchase at different prices, all else held constant.

A

Market Demand

67
Q

The demand ________ is made up of each of the relationships between demand and price.

A

Curve

68
Q

The demand ________ is represented by a point on the curve.

A

Schedule

69
Q

What is represented by the slope of the demand curve?

A

Law of Demand

70
Q

List the five (5) determinants of demand:

A
  1. Tastes
  2. Income
  3. Price of a Related Good
  4. Population
  5. Expected Future Price
71
Q

The amount of a good or service that firms are willing to offer for sale at a given price, all else held constant.

A

Quantity Supplied

72
Q

As prices of a good or service rise the quantity supplied will increase and vice versa, is called what?

A

Law of Supply

73
Q

All the quantities of a good or service firms are willing to sell at different prices, all else held constant.

A

Market Supply

74
Q

List the five (5) determinants of supply:

A
  1. Price of a Related Good
  2. Input Price
  3. Productive Capacity
  4. Estimated Future Price
  5. Technology
75
Q

An excess of supply of a good or service.

A

Surplus

76
Q

Not enough of a good or service available to meet the quantity demanded

A

Shortage

77
Q

A market is said to be at equilibrium when there is what?

A

When Quantity Supplied = Quantity Demanded.

ECON202 (1 decks)

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