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?

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
What does scarcity mean in economics?
Limited resources
26
What did Adam Smith name the property that describes market interaction?
invisible hand
27
What does utility provide?
Satisfaction
28
What does every choice have?
Opportunity cost
29
What is economic efficiency?
Max benefit from scarce resources
30
What do economists assume about consumption and utility?
More consumption, more utility
31
What is true for any choice inside the production possibilities frontier?
Productively inefficient
32
What does government spending analysis involve?
Identify beneficial spending
33
What do economists believe about choices?
They involve tradeoffs
34
What is opportunity cost?
Lost opportunity to obtain something else
35
What pattern is common in consumption?
Decreasing utility
36
What does the market economy facilitate?
Coordination of production
37
Who coined the phrase 'we cannot always get what we want'?
Lionel Robbins
38
What is the law of diminishing marginal utility?
Decline in additional satisfaction
39
What is scarcity in human nature?
Limitations in time, money, etc.
40
What happens to utility as more of a good is received?
It declines
41
What is an example of opportunity cost?
Missing class to sleep
42
Can you give an example of opportunity cost in relationships?
Choosing one person to marry