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ECON111 > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

What is the fundamental principle that every choice has?

A

Opportunity cost

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2
Q

When will a rational consumer purchase additional units?

A

Marginal utility exceeds opportunity cost

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3
Q

What is a key concept in economics related to choices?

A

Efficiency

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4
Q

What does a flatter PPF indicate about opportunity cost?

A

Lower opportunity cost

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5
Q

Why would someone choose a high-pressure, high-paying job?

A

To earn and spend money

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6
Q

What is a tradeoff?

A

Choosing more of one good at the cost of less of the other

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7
Q

What is the equation for any budget constraint?

A

P * Q = Budget

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8
Q

What characterizes an inefficient organization?

A

Long delays, high costs

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9
Q

What does allocative efficiency represent?

A

Society’s desired combination

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10
Q

What does the individual opportunity set show?

A

Constraints on individual consumer choices

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11
Q

What is a sunk cost?

A

Money spent that cannot be recovered

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12
Q

What characterizes an efficient organization?

A

Meets schedules, focused

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13
Q

What does allocative efficiency mean?

A

Producers supply consumer demand

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14
Q

What is a characteristic of a job that someone might choose that leaves time for family and friends?

A

Flexible hours, low workload

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15
Q

What does the social production possibilities frontier show?

A

Constraints on society’s production choices

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16
Q

What does productive efficiency mean?

A

Impossible to increase one good’s production

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17
Q

What fundamental economic problem does every society face?

A

Scarcity

18
Q

What does the slope of the PPF represent?

A

Opportunity cost

19
Q

What is positive analysis?

A

Analyzing benefits vs. costs

20
Q

What exceeds the monetary cost of attending college?

A

Opportunity cost

21
Q

What does the budget constraint framework emphasize?

A

Not all-or-nothing choices

22
Q

What is allocative efficiency?

A

Mix of goods society desires

23
Q

What happens when an economy improves efficiency?

A

More goods produced

24
Q

What is the goal of economic analysis?

A

Study actual people in the actual economy

25
Q

What does scarcity mean in economics?

A

Limited resources

26
Q

What did Adam Smith name the property that describes market interaction?

A

invisible hand

27
Q

What does utility provide?

A

Satisfaction

28
Q

What does every choice have?

A

Opportunity cost

29
Q

What is economic efficiency?

A

Max benefit from scarce resources

30
Q

What do economists assume about consumption and utility?

A

More consumption, more utility

31
Q

What is true for any choice inside the production possibilities frontier?

A

Productively inefficient

32
Q

What does government spending analysis involve?

A

Identify beneficial spending

33
Q

What do economists believe about choices?

A

They involve tradeoffs

34
Q

What is opportunity cost?

A

Lost opportunity to obtain something else

35
Q

What pattern is common in consumption?

A

Decreasing utility

36
Q

What does the market economy facilitate?

A

Coordination of production

37
Q

Who coined the phrase ‘we cannot always get what we want’?

A

Lionel Robbins

38
Q

What is the law of diminishing marginal utility?

A

Decline in additional satisfaction

39
Q

What is scarcity in human nature?

A

Limitations in time, money, etc.

40
Q

What happens to utility as more of a good is received?

A

It declines

41
Q

What is an example of opportunity cost?

A

Missing class to sleep

42
Q

Can you give an example of opportunity cost in relationships?

A

Choosing one person to marry

ECON111 (31 decks)

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