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Spring Semester > Econ 101 Exam 1 > Flashcards

Econ 101 Exam 1 Flashcards

1
Q

Define Economy

A

One who manages a household.

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2
Q

A lot of decisions are based on what 3 basic questions?

A
  1. What to produce?
  2. How to produce?
  3. For whom to produce?
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3
Q

We must ______ resources.

A

Allocate

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4
Q

Are used to produce goods and services (g + s)

A

Resources

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5
Q

What are the four types of Resources?

A

Capital
Labor
Natural Resources
Entrepreneurial Ability

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6
Q

A human creation.

A

Capital

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7
Q

What is Capital?

A

Something produced that is used to produce something else.

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8
Q

What is Physical Capital?

A

Physical goods used to make other goods.

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9
Q

What is this an example of?
Ex.- Tools, machinery, computers, etc.)

A

Physical Capital

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10
Q

What is Human Capital?

A

Skills + knowledge people gain to increase productivity.

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11
Q

What is this an example of?
Ex.- Education, training, etc.)

A

Human Capital

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12
Q

Human effort

A

Labor

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13
Q

What is Labor?

A

The TIME people spend producing g + S.

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14
Q

What is Capital Stock?

A

Physical Capital + Human Capital = Total Useful Capital

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15
Q

How do we use economics every day?

A

Prices, buying decisions, use of time, etc.

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16
Q

What is the payment form of Capital?

A

Interest

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17
Q

What is the payment form of Labor?

A

Wage

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18
Q

What are Natural Resources?

A

Nature’s creations

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19
Q

What are the two forms of Natural Resources?

A

Renewable and Nonrenewable

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20
Q

What is the payment form of Natural Resources?

A

Rent

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21
Q

What qualities fall under Entrepreneurial Ability?

A

Imagination, skills to organize, and risk

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22
Q

What is the payment form of Entrepreneurial Ability?

A

Profit

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23
Q

The most fundamental economic problem we have is that Resources are ________.

A

scarce

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24
Q

What does scarce mean?

A

Not freely available, price is higher than zero

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25
Q

Define Economics

A

Science of scarcity
Study of how people use their limited resources to satisfy unlimited wants.

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26
Q

What are the four types of Decision Makers?

A

Households
Firms
Governments
Rest of World

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27
Q

Consumers demand _______.

A

g + s

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28
Q

Resource owners ______ resources.

A

supply

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29
Q

What two types fall under households?

A

Consumers and Resource Owners

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30
Q

Firms and Governments demand ________ to produce g + s.

A

Resources

31
Q

What does the Rest of the World do?

A

Trade

32
Q

Buyers and Sellers carry out exchanges in ________.

A

Markets

33
Q

G + S are exchanged in _________.

A

Product Markets

34
Q
  • Determine prices + quantities
  • Provides mechanism to convey info about the quantity, quality, and price of g + s offered for sale.
A

Markets

35
Q

Labor, Capital, etc are exchanged in ________.

A

Resource Markets

36
Q

Individuals are rational.

A

Rational Self Interest

37
Q

Choice requires _______

A

Time + Info

38
Q

Time is ______

A

scarce

39
Q

Information is _________

A

valuable

40
Q

Being willing to pay for info ________

A

improves choices

41
Q

Will continue to acquire info as long as ____________ is higher than additional cost.

A

additional benefit expected

42
Q

Economic analysis is _________.

A

Marginal analysis

43
Q

Define Marginal

A

additional, extra, incremental

44
Q

Microeconomics focuses on individual ________.

A

Markets

45
Q

What is!

A

Positive Analysis

46
Q

What should be

A

Normative Analysis

47
Q

Can be supported/ rejected based on facts/data/

A

Positive Analysis

48
Q

Opinion or Value judgement that cannot be supported/rejected.

A

Normative Analysis

49
Q

What is this an example of?
Ex.- You should wear a seatbelt.
Abortion should be illegal.

A

Normative Analysis

50
Q

Define Opportunity Cost

A

Value of next best alternative

51
Q

The choice to do something is at the same time the choice not to do something else.

A

Opportunity Cost

52
Q

Define Sunk Costs

A

Has already been incurred

53
Q

We _____ Sunk Costs when making economic decisions.

A

ignore

54
Q

All production has an ____________.

A

Opportunity Cost

55
Q

What is this an example of?
Ex.- You purchased a $15 dollar movie ticket, but you realize during the movie that you hate it.

A

Sunk Cost

56
Q

Define Efficient Production

A

Max possible output, given existing resources + technology

57
Q

Define PPF

A

Shows all combos of 2 goods that can be produced, assuming efficient production

58
Q

What does PPF stand for?

A

Production Possibilities Frontier

59
Q

What are these assumptions of?
- 2 broad classes of output
- Quantity, quality of Res + Tech is fixed
- Resources are specialized

A

PPF

60
Q

What are Specialized resources

A

Some resources are better adapted to produce one good than another.

61
Q

What do the points on the curve of a PPF mean?

A

No way to allocate resources to increase production of 1 good without decreasing the production of the other good.

62
Q

What do the points inside the curve on a PPF mean?

A
  • Waste, mismanagement of resources
  • Unemployed resources
63
Q

What do the points outside of the curve mean?

A

Unattainable

64
Q

The slope of a PPF is always ______.

A

Negative

65
Q

Why does the line on a PPF bow out?

A

Law of Increasing Opportunity Cost and resources are specialized

66
Q

Define Law of Increasing Opportunity Cost

A

To produce more of 1 good, increasing amounts of the other good must be given up.

67
Q

What does a Linear PPF mean?

A

Constant Opportunity Cost and Resources are not specialized

68
Q

Define Economic Growth

A

Increasing the productive capacity of economy

69
Q

What causes the PPF to shift?

A

Economic Growth

70
Q
  • Improved Tech
  • More resources
  • Better Resources
A

PPF shifts out

71
Q

More resources and better resources ______ capital stock.

A

increase

72
Q
  • exhaust
  • Lose scarce resources
  • War
  • Natural Disasters
  • Decrease in Natural Resources
A

PPF shifts in

73
Q

What are the Economic concepts illustrating PPF

A
  • Efficiency
  • Scarcity (Opp Cost & Econ Growth)
  • Choice

Spring Semester (28 decks)

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