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Econ 101 Midterm > Econ Midterm #1 > Flashcards

Econ Midterm #1 Flashcards

1
Q

Scarcity

A

the condition that arises bc wants exceeds the ability of resources to satisfy them (we must choose among available alternatives)

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2
Q

Economics

A

is the social science that studies the choices that individuals, businesses, and governments make as they cope with scarcity, the incentives that influence those choices, and the arrangement that coordinate them.

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3
Q

Microeconomics

A

the study of the choices that individuals and businesses make and the way these choices interact and are influenced by governments.

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4
Q

Macroeconomics

A

the study of the total effects on the national economy and the global economy of the choices that individuals, businesses, and governments make.

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5
Q

Economic ?’s

A
  • How do choices determine what, how, and for whom goods and services get produced?
  • When do choices made in self-interest also promote the social interest?
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6
Q

goods and services

A

are objects and actions that people value and product to satisfy human wants

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7
Q

what

A

goods and services get produced and in what quantities

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8
Q

How

A

goods and services get produced and in what quantities

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9
Q

For whom

A

are the various goods and services produced (this depends on the income that people earn and the prices they pay for goods and services)

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10
Q

Self interest

A

choices that are best for the individual who makes them

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11
Q

social interest

A

the choices that are best for a society as a whole

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12
Q

trade off

A

an exchange (giving up something for something else)

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13
Q

Opportunity cost

A

is the best thing that you must give up to get something – the highest valued alternative forgone (example: professor gives up spending time with family in order to teach)

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14
Q

marginal cost

A

is what you must give up to get one additional unit of it

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15
Q

Marginal benefit

A

is the what you gain when you get one more unit of something (is measured by what you are willing to give up to get one additional unit of it)

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16
Q

normative statements

A

disagreements that cant be settled by facts

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17
Q

positive statements

A

disagreements that can be settled by facts

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18
Q

cross section graph

A

shows value of an economic variable for different groups in a population at a point in time
Ex: a graph that shows SAT scores of male and female students in 2012 is a cross section graph

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19
Q

ceteris paribus

A

“other things remaining the same”- this assumption is used when graphing a relationship that involves more than two variables

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20
Q

production possibilities frontier

A

boundary between the combination of goods and services that can be produced and the combinations that cannot be produced given the available factors of productions and the state of technology

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21
Q

production efficiency

A

a situation in which we cannot produce more of one good or service without producing less or something else

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22
Q

free lunch

A
  • a gift or getting something without giving up something else
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23
Q

On a PPF there are 500 lb apple and 1200 lb bananas and at another point there is 300 lb and 1300 lb bananas the opportunity cost of producing bananas is

A

200 apples/ 100 bananas = 2 lb apples

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24
Q

economic growth

A

sustained expansion of production possibilities (when an economy’s resources increase, its production possibilities expand and its PFF shifts outward)

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25
Q

absolute advantage

A

when a nation is more productive than another (needs fewer inputs or takes less time to produce a good or perform a production task. Nations gain from specializing in production of the goods in which they have a comparative advantage and then trading.

26
Q

comparative advantage

A

is the ability of a person to perform an activity or produce a good or service at a lower opportunity cost than someone else.

27
Q

If the PFF between two goods were a straight line (the resources are equally productive and then the OC of one good in terms of another would be

A

constant

28
Q

In a PPF the cost of producing more units of a good is measured by

A

the amount of the other good or service that must be forgone

29
Q

The concave shape of the production possibilities curve implies that as production of one good increases, society must forgo

A

increasing amounts of another good

30
Q
  • To increase economic growth a nation should encourage education because
A

it increases quality of labor

31
Q

In the production possibilities frontier model, an unattainable point lies

A

outside the PPF

32
Q

Gasoline prices increase by 50% and other things remain the same. The quantity demanded

A

decreases

33
Q

An advertising company puts out successful advertising campaign that makes most people want to buy milk… as a result the demand for milk

A

increases

34
Q

Markets

A

any arrangement that brings buyers and sellers together

35
Q

competitive markets

A

has so many buyers and so many sellers that no individual buyer or seller can influence the price

36
Q

Quantity demanded

A

the amount of a good, service, or resource that people are willing and able to buy during a specified period at a specified price

37
Q

law of demand

A

if the price of a good rises, the quantity demanded of that good decreases
If the price of the good falls, the quantity demanded of the good increases

38
Q

demand

A

the sum of the demands of all buyers in a market, the market demand curve is the horizontal sum of the demand curves of all buyer in the market

39
Q

Market Demand

A

the sum of the demands of all buyers in a market, the market demand curve is the horizontal sum of the demand curves of all buyer in the market

40
Q

substitute

A

a good that can be consumed in place of another good (the demand for a good increases if the price of one substitute rises, the demand for a good decreases if the price of one substitute falls)

41
Q

complement

A

a good consumed with another good, the demand for a good increases if the price of one of its complements falls, the demand for a good decreases if the price of one of its complements rises

42
Q

rise of expected future price

A

Increases the current demand for the good

43
Q

normal good

A

a good for which the demand increases if the income increases and the demand decrease if income decreases.

44
Q

inferior good

A

a good for which the demand decreases if income increases and the demand increases if income decreases

45
Q

Preferences

A

when preferences change the demand for one item increase and the demands for another item decreases (The preferences change when people become better informed and new goods become available)

46
Q

quantity supplied

A

amount of a good, service or resource that people are willing and able to sell during a specified period at a specified price

47
Q

law of supply

A

if the price of a good rises, the quantity supplied of that good increases. if the price of the good falls, the quantity supplied of that good decreases

48
Q

supply

A

the relationship between the quantity supplied of a good and the price of the good when all other influences on selling plans remain the same

49
Q

An increase in productivity

A

lowers the cost and increases supply

50
Q

market equilibrium

A

occurs when the quantity demanded equals the quantity supplied (the buyer and sellers plan are consistent)

51
Q

equilibrium price

A

the price at which the quantity demanded equals the quantity supplied

52
Q

Equilibrium quantity

A

the quantity bought and sold at the equilibrium price.

53
Q

shortage- occurs when the quantity demanded exceeds the quantity supplied (causes price to rise)

A
54
Q

Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result, the equilibrium price_____, and the equilibrium quantity ______

A

(rises, increases)

55
Q

When the demand curve shifts rightward and the market moves to a new equilibrium, then the ________

A

quantity supplied increases

55
Q

If the supply of solar panels increases _________

A

the price goes down and the quantity increases

56
Q

The equilibrium price of movie tickets is 10$. If the supply curve for the movies shifts _______, the equilibrium price will ______

A

(rightward, decrease)

57
Q

surplus

A

occurs when the quantity supplied exceeds the quantity demanded (causes price to fall

58
Q

when demand changes…

A

the supply curve does NOT shift, change in quantity supplied, equilibrium price and quantity change in same direction as demand

59
Q

when supply changes…

A

the demand curve does NOT shift, changed in quantity demanded, equilibrium price changes in opposite direction as supply, equilibrium quantity changes in same direction as supply

Econ 101 Midterm (1 decks)

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