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EC 201 > Exam 1 > Flashcards

Exam 1 Flashcards

1
Q

People and the choices they make in a world of scarce resources

A

Economics

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2
Q

How people make decisions given scarcity

A

Economics

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3
Q

A world of ____ resources with _____ wants

A

limited

unlimited

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4
Q

The study of the economy at small scale level

A

Microeconomics

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5
Q

The study of the economy at large scale level

A

Macroeconomics

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6
Q

___ looks at the whole forest while __ looks at individual trees

A

Macro

Micro

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7
Q

Micro or Macro

The effect of higher cigarette taxes on the quantity of cigarettes sold

A

Macro

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8
Q

The effect of higher income taxes on the total amount of consumer spending

A

Macro

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9
Q

The reasons for the economies of East Asian countries growing faster than the economies of sub-Saharan African countries

A

Macro

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10
Q

Any item (whether it is found in nature, something already produced, or any human effort) that is used to produce a good or service

Anything used to make something else

A

Resource

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11
Q

The foundation of all productive activity

A

Resources

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12
Q

Four types of resources

A

Land
Labor
Capital
Entrepreneurial ability

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13
Q

Any/all natural resource that we use in production

Ex. Trees, water, sand, minerals, oil, animals

A

Land

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14
Q

Any physical or mental activity devoted to produce goods or services

Ex. People

A

Labor

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15
Q

Ex. tools, machine, factories, knowledge

A

Capital

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16
Q

Tangible items

Ex. tools, machines, buildings

A

Physical Capital

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17
Q

Intangible items

Ex. education, skills

A

Human Capital

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18
Q

The talent or ability to be able to combine the other resources in order to produce something

A

Entrepreneurial ability

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19
Q

The value of your next best alternative or the value you give up in order to get something you want

A

Opportunity Cost

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20
Q

There is no such thing as a free lunch means?

A

There is no such thing without an opportunity cost and there will always be resources used

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21
Q

Additional benefit associated with one more unit of activity

A

Marginal benefit

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22
Q

Additional costs associated with one more unit of activity

A

Marginal Cost

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23
Q

The more production you have, the less…

A

resources you have to create a good or service (price goes up)

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24
Q

MB: As our quantity goes up…

A

each additional unit brings us less benefit of a price

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25
Q

MB: If price goes up..

A

quantity goes down

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26
Q

MC: As quantity goes up…

A

price or cost also rices

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27
Q

MC: Each additional unit becomes…

A

more costly

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28
Q

Where the two curves of MB and MC cross

A

Optimal level

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29
Q

The stable point where people don’t want to change

A

Equilibrium

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30
Q

Production Possibilities Frontier Line meanings:

On the right of the line is:
On the line is:
On the left of the line is:

A

Right: impossible production

On the line: possible and efficient

Left: possible but inefficient

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31
Q

All points of production on the frontier that opportunity cost is the same

A

Constant Opportunity Cost

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32
Q

Calculating opportunity cost

A

Option 1 - option 3 where one column of each is zero

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33
Q

The ability to produce a good or service at a lower relative opportunity cost than someone else

A

Comparative Advantage

34
Q

To tell us how goods, resource, services flow back into the economy

A

Circular Flow Model

35
Q

Any place or mechanism where buyers and sellers are brought together to trade goods, services, and resources

A

Market

36
Q

Who sets prices

A

The market

37
Q

What slope is a demand curve

A

downward-sloping

38
Q

3 reasons demand slopes down

A

Income effect
Diminishing Marginal Utility
Substitution Effect

39
Q

As the price of something goes down, the purchasing power goes up

A

Income effect

40
Q

The amount of benefit decreases

A

Diminishing Marginal Utility

41
Q

If the price of something increases, you can buy something cheaper

A

Substitution Effect

42
Q

All the buyers added together

A

Market Demand

43
Q

How does quantity demand change

A

if the price changes

44
Q

How does a change in demand happen

A

When a non-price variable changes

45
Q

Parallel shift to the right

A

Increase in demand

46
Q

Parallel shift to the left

A

Decrease in demand

47
Q

Determinants of Demand

A
  • Taste and Preferences
  • Number of Buyers
  • Expectations
48
Q

Any good, service, or resource that is viewed as a replacement for another

A

Substitutes

49
Q

Goods that are used or consumed together

A

Complements

50
Q

Good that has a direct relationship between income and demand

A

Normal good

51
Q

Good that has indirect relationship

A

Inferior good

52
Q

A payment made to the government that is a result of some economic activity

A

Tax

53
Q

A payment made by the government that doesn’t require any economic activity

A

Subsidy

54
Q

A maximum legal price at which a good, service, or resource can be sold

A

Price Ceiling

55
Q

Binding Price Ceiling means

A

Price is below equilibrium and shortage will occur

56
Q

Non-binding Price Ceiling means

A

Price is above equilibrium but will most likely go to equilibrium

57
Q

A minimum legal price at which a good, service, or resource can be sold

A

Price Floor

58
Q

Quantity demanded comes from

A

Businesses

59
Q

Quantity supplied comes from

A

Workers

60
Q

Tax Revenue =

A

Tax amount * Qt

61
Q

The difference between the maximum price consumers are willing and able to pay for a good or service and the price they actually pay

A

Consumer Surplus

62
Q

The difference between the price producers receive for a good or service and the minimum price they are willing and able to accept

A

Producer Surplus

63
Q

Everything below the demand curve and above the price

A

Consumer Surplus

64
Q

Distance between the minimum they are willing to accept and the price of the good

Everything above the supply curve and below the price

A

Producer Surplus

65
Q

The sum of the consumer and producer surplus

A

Economic Surplus

66
Q

The value of economic surplus that is forgone when a market is not allowed to adjust to its competitive equilibrium

A

Deadweight Loss

67
Q

A market in which the demand and supply curves represent the benefits and cost to the consumers and producers in the market

A

Private Market

68
Q

The cost to the producer of an additional unit of a good or service

A

Private Marginal Cost

69
Q

The benefits to the consumer of an additional unit of a good or service

A

Private Marginal Benefit

70
Q

The cost of an additional unit of a good or service that is imposed on people other than the producer

A

External Marginal Cost

71
Q

The cost to society in producing an additional unit of a good or service

A

Social Marginal Cost

72
Q

The benefit of an additional unit of a good or service that is enjoyed by people other than the direct consumer of the good or service

A

External Marginal Benefit

73
Q

The benefit to society of consuming an additional unit of a good or service

A

Social Marginal Benefit

74
Q

Demand curve that only considers the private benefits of this consumption

A

Private Demand

75
Q

Demand that looks at both the private and external benefits of consumption

A

Social Demand Curve

76
Q

The supply that affects only the private cost of this production

A

Private Supply

77
Q

The supply that affects both private and external costs

A

Social Supply

78
Q

Any good or service that is both nonrival and nonexcludable

A

Public Good

79
Q

The characteristic of some goods or services whereby the consumption of the good or service by one person does not diminish the amount available to someone else

A

Nonrival

Ex. Internet

80
Q

A characteristic of some goods or services whereby people cannot easily be prevented from consuming the good or service, even if they don’t pay for it

A

Nonexcludable

Ex. Fireworks

EC 201 (5 decks)

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