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STUDY > MIDTERM QUIZLET (ECODEV) > Flashcards

MIDTERM QUIZLET (ECODEV) Flashcards

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1
Q

TRUE OR FALSE.
The management of society’s resources is important because resources are not scarce.

A

FALSE
(resources are scarce)

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2
Q

It means that society has limited resources and therefore cannot produce all the goods and services people wish to have.

A

SCARCITY

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3
Q

The study of how society manages its scarce resources.

A

ECONOMICS

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4
Q

What are the 10 principles of economics?

A

P#1. PEOPLE FACE TRADEOFFS

P#2. THE COST OF SOMETHING IS WHAT YOU GIVE UP TO GET IT.

P#3. RATIONAL PEOPLE THINKS AT THE MARGIN.

P#4. PEOPLE RESPOND TO INCENTIVES.

P#5. TRADE CAN MAKE EVERYONE BETTER OFF.

P#6. MARKETS ARE USUALLY A GOOD WAY TO ORGANIZE ECONOMIC ACTIVITY.

P#7. GOVERNMENTS CAN SOMETIMES IMPROVE MARKETS OUTCOMES.

P#8. THE STANDARD OF LIVING DEPENDS ON A COUNTRY’S PRODUCTION.

P#9. PRICES RISE WHEN THE GOVERNMENT PRINTS TOO MUCH MONEY.

P#10. SOCIETY FACES SHORT-RUN TRADEOFF BETWEEN INFLATION AND UNEMPLOYMENT

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5
Q

To get one thing, we usually have to give up another thing.

A

PEOPLE FACE TRADEOFFS.

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6
Q

TRUE OR FALSE.
Making decisions requires trading off one goal against another.

A

TRUE

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7
Q

It means that society gets the most that it can from its scarce resources.

A

EFFECIENCY

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8
Q

It means the benefits of those resources are distributed fairly among members of society.

A

EQUITY

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9
Q

Decisions require comparing costs and benefits of alternatives.

A

THE COST OF SOMETHING IS WHAT YOU GIVE UP TO GET IT.

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10
Q

Cost of item is what you give up obtaining that item.

A

OPPORTUNITY COST

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11
Q

This are small, incremental adjustments to an existing plan of action.

A

MARGINAL CHANGES

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12
Q

TRUE OR FALSE.
People make decisions by comparing costs and benefits at the margin.

A

TRUE

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13
Q

It is means “additional”

A

MARGINAL

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14
Q

TRUE OR FALSE.
If you think at the margin, you are thinking about what the next or additional action means for you.

A

TRUE

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15
Q

TRUE OR FALSE.
Marginal changes in cost or benefits does not motivate people to respond.

A

FALSE
(It can motive people to respond)

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16
Q

TRUE OR FALSE.
The decision to choose one alternative over another occurs when that alternative’s marginal benefits exceed its marginal costs!

A

TRUE

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17
Q

TRUE OR FALSE.
Sales are incentives for consumers to buy, because firms know consumers generally to lower prices by purchasing more.

A

TRUE

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18
Q

These are incentives for consumers to buy, because firms know consumers generally to lower prices by purchasing more.

A

SALES

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19
Q

TRUE OR FALSE.
People gain from their ability to trade with one another.

A

TRUE

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20
Q

Results in gains from trading.

A

COMPETITION

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21
Q

TRUE OR FALSE.
Competition results in loss from trading.

A

FALSE

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22
Q

It allows people to specialize in what they do best.

A

TRADE

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23
Q

TRUE OR FALSE.
Trade allows people to specialize in what they do best.

A

TRUE

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24
Q

An economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services.

A

MARKET ECONOMY

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25
Q

They decide what to buy and who to work for.

A

HOUSEHOLDS

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26
Q

They decide who to hire and what to produce.

A

FIRMS

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27
Q

He made the observation that households and firms interacting in markets act as if guided by an “invisible hand”.

A

ADAM SMITH

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28
Q

Occurs when the market fails to allocate resources efficiently.

A

MARKET FAILURE

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29
Q

TRUE OR FALSE.
When the market fails (break down) government cannot intervene to promote efficiency and equity.

A

FALSE
(Government can intervene to promote efficiency and equity)

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30
Q

TRUE OR FALSE.
When individuals make decisions, they face trade offs among alternative goals.

A

TRUE

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31
Q

TRUE OR FALSE.
The cost of any action is measured in terms of foregone opportunities.

A

TRUE

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32
Q

TRUE OR FALSE.
Rational people make decisions by comparing marginal cost and marginal benefits.

A

TRUE

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33
Q

TRUE OR FALSE.
People change their behavior in response to the incentives they face.

A

TRUE

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34
Q

TRUE OR FALSE.
Trade can be mutually beneficial.

A

TRUE

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35
Q

A good way of coordinating trade among people.

A

MARKETS

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36
Q

It can improve market outcomes if there is some market failure or if the market outcome is inequitable.

A

GOVERNMENT

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37
Q

The ultimate source of living standards.

A

PRODUCTIVITY

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38
Q

The ultimate source of inflation.

A

MONEY GROWTH

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39
Q

TRUE OR FALSE.
Society faces a short-run tradeoff between inflation and unemployment.

A

TRUE

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40
Q

A Scottish thinker known for his ideas about economics and reality.

A

ADAM SMITH

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41
Q

“THE FATHER OF ECONOMICS” or “THE FATHER OF CAPITALISM”

A

ADAM SMITH

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42
Q

Two books that Adam smith wrote:

A
  1. The Theory of Moral Sentiments
  2. The Wealth of Nations
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43
Q

This book, he talks about how people behave and make moral choices, focusing on sympathy and social interactions.

A

THE THEORY OF MORAL SENTIMENTS

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44
Q

Famous book for explaining how economies works. In this book, he introduced the idea of the “invisible hand”, suggesting that when people act in their own interests, it can benefit everyone.

A

THE WEALTH OF NATIONS

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45
Q

Economist play in two roles:

A
  1. Scientist
  2. Policy advisors
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46
Q

Try to explain the world

A

SCIENTIST

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47
Q

Try to improve

A

POLICY ADVISORS

48
Q

The dispassionate development and testing of theories about how the world works.

A

SCIENTIFIC METHOD

49
Q

Simplify the compex world, make it easier to understand.

A

ASSUMPTIONS

50
Q

A highly simplified representation of a more complicated reality.

A

MODEL

51
Q

They used models to study economic issues.

A

ECONOMIST

52
Q

A visual model of the economy, shows how dollars flow through markets among households and firms.

A

THE CIRCULAR FLOW DIAGRAM

53
Q

Two types of Actors in economy:

A
  1. Households
  2. Firms
54
Q

Two markets:

A
  1. The market for goods and services.
  2. The market for “factors of production”
55
Q

The resources the economy usesto produce goods & services, including; labor, land, & capital.

A

FACTORS OF PRODUCTION

56
Q

Own the factors of product, sell/rent them to firms for income.

A

HOUSEHOLDS

57
Q

Buy and consume goods & services

A

HOUSEHOLDS

58
Q

Buy/hire factors of production, use them to produce goods and services.

A

FIRMS

59
Q

Sell goods and services

A

FIRMS

60
Q

A graph that shows the combination of goods the economy can possibly produce given the available resources and the available technology.

A

PRODUCTION POSSIBILITIES FRONTIER (PPF)

61
Q

TRUE OR FALSE.
Moving along a PPF involves shifting resources from the production of one good to the other.

A

TRUE

62
Q

TRUE OR FALSE.
Society faces tradeoff: Getting more of one good requires sacrificing some of the other.

A

TRUE

63
Q

TRUE OR FALSE.
The slope of the PPF tells you the opportunity cost of one good in terms of the other.

A

TRUE

64
Q

Shows all combinatioms of two goods that an economy can possibly produce, givem its resources and technology.

A

PRODUCTION POSSIBILITIES FRONTIER

65
Q

Illustrates the concepts of tradeoff and opportunity cost, efficiency and inefficiency, unemployment, and economic growth.

A

PRODUCTION POSSIBILITIES FRONTIER

66
Q

Illustrates the concept of increasingopportunity cost.

A

A bow-shaped PPF

67
Q

It is the study of how households and firms make decisions and how they interact in markets.

A

MICROECONOMICS

68
Q

It is the study of economy-wide phenomena, including inflation, unemployment, and economic growth.

A

MACROECONOMICS

69
Q

As ____, economists make positive statements.

A

SCIENTIST

70
Q

As _____, economists make normative statements.

A

POLICY ADVISORS

71
Q

This statements can be confirmed or refuted.

A

POSITIVE STATEMENTS

72
Q

This statements cannot be confirmed or refuted.

A

NORMATIVE STATEMENTS

73
Q

TRUE OR FALSE.
Economists often give conflicting policy advice.

A

TRUE

74
Q

TRUE OR FALSE.
They sometimes disagree about the validity of alternative positive theories sbout the world.

A

TRUE

75
Q

TRUE OR FALSE.
They may have different values and, therefore, different normative views about what policy should try to accomplish.

A

TRUE

76
Q

TRUE OR FALSE.
There are many propositions about which most economists agree.

A

TRUE

77
Q

As ______, economists try to explain the world using models with appropriate assumptions.

A

SCIENTISTS

78
Q

TWO SIMPLE MODELS:

A
  1. CIRCULAR-FLOW DIAGRAM
  2. PRODUCTION POSSIBILITIES FRONTIER
79
Q

Studies the behavior of consumers and firms, and their interactionsin markets.

A

MICROECONOMICS

80
Q

Studies the economy as a whole

A

MACROECONOMICS

81
Q

As________, economists offer advice on how to improve the world.

A

POLICY ADVISERS

82
Q

Goods produce domestically and sold abroad.

A

EXPORTS

83
Q

Means to sell domestically produced goods abroad.

A

To export

84
Q

Goods produced abroad and sold domestically

A

Imports

85
Q

Means to purchase goods produced in other countries.

A

To import

86
Q

Two gains:

A
  1. Absolute advantage
  2. Comparative advantage
87
Q

The ability to produce a good using fewer inputs than another producer.

A

ABSOLUTE ADVANTAGE

88
Q

TRUE OR FALSE.
Two countries can gain from trade when each specializes in the good it produces at lowest cost.

A

TRUE

89
Q

Measures the cost of a good in terms of the inputs required to produce it.

A

ABSLOUTE ADVANTAGE

90
Q

Aside from absolute advantage, we can also use _____ to measure cost

A

OPPORTUNITY COST

91
Q

The ability to produce a good at a lower opportunity cost than another producer.

A

COMPARATIVE ADVANTAGE

92
Q

TRUE OR FALSE.
Absolute advantage is necessary for comparative advantage.

A

FALSE
(not necessary)

93
Q

TRUE OR FALSE.
Gains from trade arise from comparative advantage (differences in opportunity costs)

A

TRUE

94
Q

TRUE OR FALSE.
When each country specializes in goods in which it has a comparative advantage, total production in all countries is higher, the world’s “economic pie” is bigger, and all countries can gain from trade.

A

TRUE

95
Q

TRUE OR FALSE.
Interdependence and trade allow everyone to enjoy a greater quantity and variety of goods & services.

A

TRUE

96
Q

TRUE OR FALSE.
When people or countries specialize in the goods in which they have a comparative advantage, the economic “pie” grows and trade can make everyone better off.

A

TRUE

97
Q

A group of buyers and sellersvof a particular good and service.

A

MARKET

98
Q

4 MARKET TYPES:

A
  1. Perfect Competition
  2. Monopoly
  3. Oligopoly
  4. Monopolistic Competition
99
Q

No individual buyer/ seller has a significant influence on market price

A

PERFECT COMPETITION

100
Q

Single producer of good; chooses output (quantity supplied) that maximizes profit

A

MONOPOLY

101
Q

Small number of suppliers; may “collude” to set price like a monopolist

A

OLIGOPOLY

102
Q

Compete on both price and quality against several producers

A

MONOPOLISTIC COMPETITION

103
Q

Each buyer/ seller has a negligible impact on market price.

A

PERFECTLY COMPETITIVE MARKET

104
Q

Amount of a good purchased at a given price.

A

QUANTITY DEMANDED

105
Q

A table

A

DEMAND SCHEDULE

106
Q

A graph

A

DEMAND CURVE

107
Q

Variables that can shift the demand curve

A
  • income
  • prices of related goods
  • tastes
    -expectations
  • number of buyers
108
Q

Entire demand curve shifts right

A

Increase in demand

109
Q

Entire demand curve shifts left

A

Decrease in demand

110
Q

Sum of all individual demands for a good ir service

A

MARKET DEMAND

111
Q

Total quality demanded of a good varies

A

MARKET DEMAND CURVE

112
Q

Income
-normal good (increase in income)
-inferior good (increase in income)

A

Normal good (increase demand)
Inferior good (decrease demand)

113
Q

Concept:
Substitutes
- an increase in the price of one
-leads to an increase in the demand for the other.

A

Complements
- an increase in the price of one
- leads to an decrease in the demand for the other.

114
Q

Amount of good sellers are willing and able to sell

A

QUANTITY SUPPLIED

115
Q
  • other things equal
  • when the price of goods rises (qty. supplied of a good rise)
A

LAW OF SUPPLY

116
Q

Sum of the supplies of all sellers for a good or service

A

MARKET SUPPLY

117
Q
A

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