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Ec 231 > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

Which discipline studies the economy as a whole or its basic subdivisions or aggregates?

  • Macroeconomics
  • Normative economics
  • Positive economics
  • Microeconomics
A

Macroeconomics

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2
Q

______ economic resources means limited goods and services

  • Physical
  • Tangible
  • Insatiable
  • Scarce
A

Scarce

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3
Q

Positive economics

A

Focuses on the analysis of facts or data to establish scientific generalizations about economic behavior

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4
Q

Utility

A

The satisfaction or pleasure obtained from consuming a good or service

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5
Q

Economizing Problem

A

the need to make choices because economic wants exceed economic means

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6
Q

Opportunity cost

A

The amount of other products that must be sacrificed to produce a unit of a product

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7
Q

Because consumers behave in a rationally self-interested manner, the consumer will purchase a good or service ______.

  • by examining only marginal benefits
  • by examining only marginal costs
  • when opportunity costs are greater than marginal benefits
  • when the marginal benefit is greater than the marginal cost
A

when the marginal benefit is greater than the marginal cost

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8
Q

True or false: Everyone except for the super wealthy has a finite, or limited, amount of income.

A

False

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9
Q

Which discipline studies the decision-making process of customers, workers, households, and business firms on an individual basis rather than as aggregates?

  • Negative economics
  • Microeconomics
  • Positive economics
  • Macroeconomics
A

Microeconomics

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10
Q

______ is the discipline that examines the performance and behavior of an economy as a whole.

A

Macroeconomics

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11
Q

People desire goods and services that provide maximum utility. In fact, our desires or wants are ______.

  • unlimited
  • supply-driven
  • limited
  • reasonable
A

Unlimited

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12
Q

True or false: Positive economics encourages value judgments.

A

False. -> Positive economics avoids value judgments, instead seeking to empirically describe the facts of the case.

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13
Q

What is a budget line?

A

A curve showing various combinations of two products a consumer can purchase with a specific amount of income.

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14
Q

Your next-door neighbors want to go on a European vacation but cannot afford it, so they decide to visit a local amusement park instead. This is an example of ______.

  • the utility problem
  • a hypothesis
  • the economizing problem
  • ceteris paribus
A

The economizing problem

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15
Q

______ comes in the form of wages, interest, rent, profit, and even from government programs.

  • Taxes
  • Spending
  • Transfers
  • Income
A

Income

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16
Q

Which of the following are issues most explored in microeconomics?

  • The level of public debt
  • Measuring the price of specific goods
  • Measuring total revenues of a firm
  • The expenditures of a government entity
  • Unemployment and inflation rates
A
  • Measuring the price of specific goods
  • Measuring total revenues of a firm
  • The expenditures of a government entity
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17
Q

All natural resources, human resources, and manufactured goods that go into the production of goods and services are considered as society’s scarce _____ resources

A

Economic

18
Q

For better or worse, people have ______.

  • few unsatisfied wants
  • virtually unlimited income
  • virtually unlimited wants
  • extremely limited desires
A

virtually unlimited wants

19
Q

A consumer’s ______ line or constraint shows various combinations of two products that can be purchased with a specific amount of income

A

Budget

20
Q

The economizing problem

A

the need to make choices because economic wants exceed economic means

21
Q

A production possibilities curve (PPC) illustrates the attainable combination ______.

  • of two goods that can be produced given a limited amount of income
  • of two goods that can be produced given a specific set of resources
  • of many goods that can be produced given an unlimited amount of resources
  • of two goods that can be produced given an unlimited amount of resources
A

of two goods that can be produced given a specific set of resources

22
Q

A production possibilities curve with an increasing slope is the result of which of the following?

  • The law of increasing opportunity costs
  • The scarcity of resources
  • The other-things-equal assumption
  • The economizing problem
A

The law of increasing opportunity costs

23
Q

Law Of Increasing Opportunity Costs

A

As the production of a good increases, the opportunity cost of producing an additional unit rises

24
Q

Land and mineral resources, transportation and communication facilities, factories and farm buildings, equipment, tools and machinery are all examples of _______.

  • economic growth
  • scarce economic resources
  • insatiable wants
  • unlimited economic resources
A

Scarce economic resources

25
Q

The optimal allocation of resources occurs when ______.

  • the marginal benefit of the good equals the marginal cost
  • the production of the two goods is equal
  • the marginal cost of producing the good is equal to zero
  • the marginal benefit of the good is greater than the marginal cost
A

the marginal benefit of the good equals the marginal cost

26
Q

From an economic standpoint, ______ includes all natural resources used in the production process.

a. capital
b. supply
c. land
d. labor

A

a. Land

27
Q

Unemployment in the economy is graphically represented by ______ the production possibilities curve.

a. a change to a new point on
b. a rightward shift of
c. points inside
d. a movement outside

A

c. points inside

28
Q

A ______ lists the different combinations of two products that can be produced with a specific set of resources, assuming full employment.

a. consumption function.
b. production possibilities table
c. budget table
d. production function

A

b. production possibilities table

29
Q

Which of the following illustrates the attainable combination of two goods that can be produced given a specific set of resources?

a. Budget line
b. Opportunity cost
c. Demand and supply curve model
d. Budget constraint
e. Production possibilities curve

A

e. Production possibilities curve

30
Q

Improvements in the methods of production allows for the creation of ______.

a. fewer goods with fewer resources
b. the same amount of goods utilizing more resources
c. fewer goods with more resources
d. more goods with available resources

A

d. more goods with available resources

31
Q

The outward bowing shape of the production possibilities curve is due to ______.

a. the diminishing marginal benefits
b. the law of decreasing opportunity costs
c. the law of increasing opportunity costs
d. the law of diminishing marginal utility

A

c. the law of increasing opportunity costs

32
Q

Which of the following can be stated as potentially true about any economy?

a) Increased supplies of the factors of production will only affect its current location on its production possibilities curve.
b) Increased supplies of the factors of production will cause its future location on the curve to expand inward.
c) Its current choice of position on its production possibilities curve helps determine the curve’s future location.
d) Its future location on its production possibilities curve has no bearing on its current decisions.

A

c) Its current choice of position on its production possibilities curve helps determine the curve’s future location.

33
Q

When an economy produces a good such that the marginal benefit equals the marginal cost, this indicates that ______.

a) resources are being allocated efficiently
b) society would be better off by increasing the output of the good
c) society’s well-being would increase by decreasing the output of the good
d) the unemployment rate is at its minimum

A

a) resources are being allocated efficiently

34
Q

A point that lies inside the production possibilities curve reflects which of the following?

a. A failure to achieve full employment
b. Too many resources being allocated to the production of one good
c. Unattainable combinations of output
d. An efficient use of resources

A

a. A failure to achieve full employment

35
Q

When a country engages in international specialization, it focuses on producing which of the following?

a. Goods with the lowest opportunity costs
b. Goods with the highest opportunity costs
c. Goods whose marginal costs exceed their marginal benefits
d. Goods that minimize utility

A

a. Goods with the lowest opportunity costs

36
Q

Production possibilities Table

A

lists the different combinations of two products that can be produced with a specific set of resources, assuming full employment.

37
Q

Which of the following enables society to produce more goods with current resources?

a. Decreases in entrepreneurial ability
b. Decreases in labor
c. Advances in technology
d. Increases in population

A

c. Advances in technology

38
Q

Suppose an economy produces consumer goods and capital goods. Its current combination of production involves a higher level of capital goods than consumer goods. Which of the following can be inferred from this current choice on its production possibilities curve?

a. That its present choice in production may result in lower future prospects for economic growth
b. That its present choice in production may result in higher future prospects for economic growth
c. That its future choice in production may result in higher present prospects for economic growth
d. That its present choice in production has no effect on future prospects for economic growth

A

b. That its present choice in production may result in higher future prospects for economic growth

39
Q

The optimal allocation of resources occurs when ______.

a. the marginal benefit of the good is greater than the marginal cost
b. the production of the two goods is equal
c. the marginal cost of producing the good is equal to zero
d. the marginal benefit of the good equals the marginal cost

A

d. the marginal benefit of the good equals the marginal cost

40
Q

Specializing and participating in international trade allows an economy to do which of the following?

a. Get more of a desired good by sacrificing greater amounts of some other good
b. Divert high-skilled resources toward low-valued services
c. Increase the quantities of capital and consumer goods available to society
d. Circumvent the output limits imposed by its own production possibilities curve

A

c. Increase the quantities of capital and consumer goods available to society
d. Circumvent the output limits imposed by its own production possibilities curve

41
Q

When an economy produces a good such that the marginal benefit equals the marginal cost, this indicates that ______.

a. the unemployment rate is at its minimum
b. resources are being allocated efficiently
c. society’s well-being would increase by decreasing the output of the good
d. society would be better off by increasing the output of the good

A

b. resources are being allocated efficiently

Ec 231 (1 decks)

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