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Microeconomics > Chapter 1 - Economic Issues and Concepts > Flashcards

Chapter 1 - Economic Issues and Concepts Flashcards

1
Q

What is productivity growth and should it increase or decrease?

A

Output or income/hrs of work effort

Increase

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2
Q

Why is the population aging and what are the 2 consequences?

A

Decrease in fertility and life expectancy increase

Labor supply shortage, increase in public care spending

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3
Q

What are some other issues of pressing concern?

A 
Climate change
Global financial stability
Rising govt debt
Globalization
Intl' trade (has benefits and challenges)
Growing income inequality
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4
Q

Describe one of society’s 3 resources: land (+ex)

A

Natural endowments

Forests, lakes, crude oil, minerals

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5
Q

Describe one of society’s 3 resources: labour

A

Workers

Mental and physical human resources

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6
Q

Describe one of society’s 3 resources: capital (+ex)

A

Manufactured aids to production

Tools, machinery, building

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7
Q

Differentiate goods and services

A

Goods: tangible (cars and shoes)
Services: intangible (legal service, education)

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8
Q

Differentiate production and consumption

A

Production: act of making goods and services
Consumption: act of using them

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9
Q

What is scarcity?

A

The need for choice

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10
Q

What is opportunity cost?

A

Value of next best alternative thats forgone when an alternative is chose - an associated cost

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11
Q

In a graph, what does the sloped/budget line represent?

A

Border between attainable and unattainable combos

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12
Q

When is one attainable vs unattainable?

A

Attainable: on or inside budget line
Unattainable: outside budget line

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13
Q

What is a PPB and what does it illustrate?

A

Production possibilities boundary

Scarcity, choice, opportunity cost

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14
Q

What is resource allocation?

A

Quantities of various goods that are produced

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15
Q

Why are resources sometimes idle?

A

Economy operating inside its PPB

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16
Q

What causes an outward shift of the PPB?

A

Growth in productive capacity

17
Q

Differentiate micro and macro

A

Micro: whats produced and how, whats consumed and by whom
Macro: idleness of resources and growth of economy’s productive capacity

18
Q

What did Adam Smith do?

A

Spontaneously generated economic order is relatively efficient

19
Q

When are transactions self-organizing?

A

When the economy is based on free-market

20
Q

What is efficiency?

A

Goods and services produced with least possible amount of resources

21
Q

What do sellers and buyers do when prices change?

A

Sellers sell more when prices are high

Buyers buy more when prices are low

22
Q

Who are the 3 decision makers?

A

Consumers, producers, govt

23
Q

What is a marginal decision?

A

Deciding if they’re better off buying or selling a little more or less

24
Q

What two characteristics does production display?

A

Specialization of labour

Division of labour

25
Q

Describe specialization

A

Allocation of different jobs to different people

26
Q

Why is specialization more efficient than self-sufficiency?

A

Individual abilities differ

Focusing on one activity leads to improvements

27
Q

Describe division

A

Breaking up production into a a series of specialized tasks

28
Q

_ greatly facilitates _, which facilitates _

A

Money, trade, specialization

29
Q

What does money eliminate?

A

Barter

30
Q

What are the two major causes of globalization?

A

Rapid reduction in transportation costs

Revolution in IT

31
Q

What are the 3 types of economic systems?

A

Traditional
Command
Free-market

32
Q

In practice, every economy is a _ economy

A

Mixed

33
Q

What did Karl Marx do?

A

Argued that free-market economies can’t be relied to generate a “just” distribution of output

34
Q

Markets or govt policy?

A

Markets work well but sometimes govt policy can improve the outcome for society as a whole

Microeconomics (12 decks)

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