CHAPTER ONE

Question 1

Factors of Production

Answer 1

Land, labor, capital

Question 2

What does the market decide?

Answer 2

What, how, when

Question 3

Factors of Production

Answer 3

Land, labor, capital, entrepreneurship

Question 4

Cateris paribus assumption?

Answer 4

All other things being equal

Question 5

Positive statements?

Answer 5

Concerned with the facts and what actually is happening, or what actually will happen.

Question 6

Normative statements?

Answer 6

Includews opnion based words like, should, too much/little

Question 7

PPC graph shows what?

Answer 7

Scarcity, choice, opportunity, cost and efficincy

Question 8

Opportunity cost?

Answer 8

The loss of potential gain from other alternatives when one alternative is chosen

Question 9

Trade-off

Answer 9

any situation where making one choice means losing something else, usually forgoing a benefit or opportunity

Question 10

Scarcity?

Answer 10

deals with how people satisfy unlimited wants and needs with limited resources.

Question 11

What part of econ does the circular flow of income model show?

Answer 11

Macroeconomics

Question 12

Transfer payments?

Answer 12

Payments to individuals are not the result of an icrease output. Ex: Unemployment benefits

Question 13

In each sector of the circular flow of income model ther is a_______

Answer 13

One leakage and one injection

Question 14

Budget deficit?

Answer 14

Governments are able to spend more money than they earn in taxes by borrowing money

Question 15

Trade imbalances?

Answer 15

Countries spend more on imports than earn from exports.

Question 16

Planned market/Command market?

Answer 16

governments control facets of economic production.

Question 17

Free market?

Answer 17

prices are determined by unrestricted competition between privately owned businesses.

Question 18

Free market cons?

Answer 18

• Demerit goods over provided(High prices)
• Unerprovided(Not for all, only those who can afford it)
• Overuse of resources=polution (High-profit low production cost)
• Orphan, sick, unemployed can’t take care of themself
• High firms may dominate industries, leading to high prices.

Question 19

Planned market cons?

Answer 19

• Misallocation of resources, shortages, and surpluses
• No price system=uneffcient resources
• Hard to motivate employees who gain no profit of firm
• Loss of personal liberty and freedom

Question 20

Dermit goods?

Answer 20

Things that are bad for people(Drugs)

Question 21

Merit goods?

Answer 21

Things good for people(Education & Healthcare)

Question 22

Capital goods?

Answer 22

Tools of the trade

Question 23

Consumer goods?

Answer 23

goods bought and used by consumers

Question 24

Human capital?

Answer 24

Knowledge

Question 25

Publics goods?

Answer 25

No one can be excluded from public goods. Can not be consumed.(Damp & school)

Question 26

Subsidy?

Answer 26

Benefit given to an individual, business, or institution, usually by the government, typically given to remove some type of burden,

Question 27

Equity?

Answer 27

the amount of capital invested or owned by the owner of a company.

Question 28

Tariff

Answer 28

A tariff is a tax imposed by a government on goods and services imported from other countries that serves to increase the price and make imports less desirable, or at least less competitive, versus domestic goods and services.

Question 29

Durable goods

Answer 29

goods not for immediate consumption and able to be kept for a period of time.Ex: automobiles, furniture

Question 30

Veblen goods

Answer 30

good for which demand increases as the price increases.. Ex: designer jewelry, yachts, and luxury cars.

Question 31

Conspicuous consumption

Answer 31

luxury goods that are easily recognizable as high-end, expensive items.

Question 32

Structural unemployment

Answer 32

is long-lasting unemployment that comes about due to shifts in an economy. Often brought about by technological changes

Question 33

Cyclical unemployment

Answer 33

is the component of overall unemployment that results directly from cycles of economic upturn and downturn. . Ex: when construction workers were laid off during the Great Recession following the financial crisis

Question 34

Frictional unemployment

Answer 34

Frictional unemployment is the time period between jobs when a worker is searching for or transitioning from one job to another.

Question 35

Marginal utility

Answer 35

the change in total utility from consuming one more or one less of an item. For example, the marginal utility of a third slice of pizza is the change in satisfaction one gets when eating the third slice instead of stopping with two.

Question 36

Utility

Answer 36

the total satisfaction received from consuming a good or service

Question 37

Disutitily

Answer 37

Work

Question 38

Cost-push inflation occurs when_____?

Answer 38

overall prices increase (inflation) due to increases in the cost of wages and raw materials.

Question 39

Inferior goods

Answer 39

a good whose demand drops when people’s incomes rise.

Question 40

Superior goods

Answer 40

a normal good for which the proportional consumption increase exceeds the proportional income increase.

Question 41

Diminishing marginal utility

Answer 41

as consumption increases, the marginal utility derived from each additional unit declines

Question 42

Macroeconomics

Answer 42

is the study of economies on the national, regional or global scale.

Question 43

Microeconomics

Answer 43

studies the behavior of individual households and firms in making decisions on the allocation of limited resources

Question 44

Marginal utility

Answer 44

is the added satisfaction a consumer gets from having one more unit of a good or service.