Economics Flashcards
Define economic supply:
Define economic demand:
Supply: the amount of a good available
Demand: the amount of a good people want
Economics
Describe the general slopes of supply and demand curves.
“Supply to the sky;
demand to the dirt”
Economics
Supply and demand are plotted on a graph with _________ on the Y-axis and _________ on the X-axis.
Supply and demand are plotted on a graph with price on the Y-axis and quantity on the X-axis.
Economics
What is the economic law of demand as price increases?
Demand decreases as price increases
(save money for other purchases)
Economics
What is the economic law of supply as price increases?
Supply increases as price increases
(make hay while the sun shines!)
Economics
Where is the supply and demand equilibrium point?
Economics
Describe where surplus can be found on a supply and demand graph.
Economics
Describe where shortage can be found on a supply and demand graph.
Economics
Give a simple definition of elasticity as a concept of economics.
The amount that the price of a product can fluctuate before it has a negative impact on sales
Economics
For perfect inelasticity, the demand curve will be _________ (horizontal/vertical).
For perfect inelasticity, the demand curve will be vertical.
Economics
If a good is economically inelastic, what does this indicate?
There is little variation in price;
people will buy it almost no matter the price.
Economics
True/False.
The elasticity of a product typically depends on its nature (i.e. whether it’s a luxury or a necessity).
True.
Economics
Is healthcare generally elastic or inelastic as a good?
Inelastic
Economics
Which economics term refers to the satisfaction one achieves from consuming a good/service?
Utility
Economics
Which economics term refers to the fact that the more of a certain product you own, the less satisfaction you receive from the later ones (e.g. the fifth chocolate you eat is not as good as the first)?
The law of diminishing marginal utility
Economics
True/False.
Most product economies are economies of scale, meaning that the production cost per unit decreases as production increases.
True.
Economics
What are economic externalities?
Effects on third parties
(not the producer or consumer; e.g., a factory’s pollution affecting community members’ well-being)
Economics
What type of tax can be used to correct for economic externalities by requiring the damaging party to pay the third parties who are negatively affected?
A Pigouvian tax
Economics
In economics, ___________ occurs when an entity has an incentive to increase its exposure to risk because it does not bear the full costs of that risk.
(E.g. a patient with full health insurance decides to eat less healthy options because he has insurance to cover expenses for any diet-related illnesses.)
In economics, moral hazard occurs when an entity has an incentive to increase its exposure to risk because it does not bear the full costs of that risk.
(E.g. a patient with full health insurance decides to eat less healthy options because he has insurance tto cover expenses for any diet-related illnesses.)
Economics
Which economics term refers to the ‘missed’ or ‘lost’ utility (value) you do not receive by choosing to spend your funds/time elsewhere?
Opportunity cost
Economics
Name the three economic factors that make a product ‘valuable.’
- _______ provided
- Relative scarcity
- Transferability
Name the three economic factors that make a product ‘valuable.’
- Utility provided
- Relative scarcity
- Transferability
Economics
Name the three economic factors that make a product ‘valuable.’
- Utility provided
- Relative _______
- Transferability
Name the three economic factors that make a product ‘valuable.’
- Utility provided
- Relative scarcity
- Transferability
Economics
Name the three economic factors that make a product ‘valuable.’
- Utility provided
- Relative scarcity
- ________
Name the three economic factors that make a product ‘valuable.’
- Utility provided
- Relative scarcity
- Transferability
Economics
What general term can be applied to describe the problem with healthcare markets that arises when high-risk customers are more likely to purchase insurance, and thus low-risk customers are more likely to opt out because they do not want to pay the elevated costs?
(I.e. insurance companies increase premiums to accomodate the liability of high-risk customers, the increased premiums drive out low-risk customers, further driving costs up as the insurance pool shrinks and becomes more and more high-risk.)
Adverse selection
Economics
Which will increase the likelihood of adverse selection in an insurance system, pooled or non-pooled plans?
Pooled plans
(range of healthy and sick all lumped into one plan, thus benefiting the sickest most and the healthiest least)
Economics
Identify the two economics terms that can be used in deciding if a career or other life choice is a good option for someone:
1.) What term refers to the person’s personal psychological preference for risk vs. assurance?
2.) What term refers to the relative speed with which the career provides value for the person’s investment (of time, energy, funds, etc.)?
1.) Discount rate
2.) Internal rate of return
Economics
If an individual’s discount rate (a matter of personal psychological preference) is higher than the internal rate of return of being a physician, should the individual decide to be a physician?
No.
The rate of return will not be satisfactory to them.
Economics
Describe the idea of marginal efficiency of capital as explained through the Grossman model.
The rate of return of health investments decreases as health increases
(i.e. an application of the law of diminishing returns on your efforts to be healthier)
Economics
True/False.
The usefulness of being healthy is that an individual will have both increased amounts of utility and also increased amounts of time to maintain / work on their health.
True.
(See the Grossman health production curve.)
Economics
What economics term refers to different populations being presented different prices for the same service (based off some descriptive factor between the populations)?
Price discrimination
Economics
What factor makes drug companies reluctant to practice price discrimination in low-income countries (i.e. charging poor countries less than wealthy)?
Black markets
(The drug shipments might be scooped up and sold at inflated rates.)
Economics
What term of economics or game theory refers to a situation in which one person’s gain is exactly equal to another’s loss?
A zero-sum game
Economics
The economics term Laissez-faire translates to what in English?
‘Let do’
(i.e. let it be)
Economics
What is gross domestic product (U.S. GDP)?
Total financial value of all goods/services produced within the U.S. borders
(whether by nationals or foreigners)
Economics
What is gross national product (U.S. GNP)?
Total financial value of goods and services produced by U.S. nationals
(whether within or without the U.S. border)
Economics
Do people tend to respond more to the threat of increased costs or the offer of increased savings?
Increased cost
(If you tell me insurance plan A costs more than insurance plan B, that is more motivating to me to choose B than you telling me that B will save me money.)
Economics
Can the economic inequality of today be based mainly on colonialism?
No. The rich have not gotten rich because the poor have gotten poor. Gross world product has not been constant. Every region of the world has experienced economic growth over the last two hundred years.
Economics
Is the transfer of income from one region to another to blame for global economic inequality?
No. Transfer of income is not to blame, but differing regional rates of increase as world income increases is to blame.
Economics
What has been the major driving force behind world economic growth?
Technology (According to the economist, John Keynes).
The industrial revolution led to new energy sources and agricultural gains.
Economics
What were the three waves of industrialization?
- The steam engine, factory production, and the telegraph
- Ocean steamers and the Suez / Panama Canals
- The light bulb, electrification of cities via powerlants, the combustion engine, and nitrogen-based fertilizer (Via the Haber-Bosch process)
Economics
What does Jared Diamond suggest in Guns, Germs, and Steel are the three most important factors determining a country’s wealth?
1. How long agriculture has existed in the country
2. Geographic location
3. The quality of the institutions
Economics
U.S. unions really started losing power in the 19____s.
U.S. unions really started losing power in the 1980s.
Economics
Why don’t higher minimum wages result in large decreases in employment?
Turnover rates decrease as well
(employers often pay less than they could and accept a higher turnover rate (~30%); the higher minimum wage would mitigate this)
Economics
Every year of U.S. high school or college education is associated with a _____% increase of additional earnings.
Every year of U.S. high school or college education is associated with a 10 % increase of additional earnings.
Economics
What do studies (including meta-analyses) find regarding social assistance programs (read: cash transfer to indigent populations) and subsequent discouragement of work in those receiving the welfare?
They find ‘no systematic evidence that cash transfer programs discourage work’
https: //academic.oup.com/wbro/article/32/2/155/4098285
https: //izajodm.springeropen.com/articles/10.1186/s40176-018-0131-9
Economics
Name some of the established benefits of social welfare.
Poverty reduction
Improved educational outcomes
Increased access to health services
Increased adult labor suppy and earnings
(not to mention, the effects outlined in the book Scarcity - increased bandwidth, happiness, and time)
- https://academic.oup.com/wbro/article/32/2/155/4098285*
- https://izajodm.springeropen.com/articles/10.1186/s40176-018-0131-9*
