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Econ > Midterm Review > Flashcards

Midterm Review Flashcards

1
Q

Deciding whether to do or use one additional unit of some resource

A

Thinking at the Margin

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2
Q

A phrase that refers to the trade offs that nations face

A

Guns or Butter

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3
Q

An ambitious leader who creates new goods and services

A

Entrepreneur

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4
Q

All human made goods that are used to produce other goods

A

Physical Capital

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5
Q

The effort people devote to a task

A

Labor

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6
Q

Physical objects such as food or phones, etc.

A

Goods

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7
Q

An item we desire but is not essential to live

A

Want

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8
Q

The common sense science of how and why people, businesses, and governments make the choices they do.

A

Economics

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9
Q

Everything that is finite or limited in quantity

A

Scarcity

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10
Q

Using wisely and well what God has given

A

Stewardship

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11
Q

A tangible, physical thing that has a measurable life span

A

Good

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12
Q

What we determine the nature of the product to be

A

Intrinsic Value

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13
Q

Also known as a schedule, and a popular method of explaining simple relationships between pairs

A

Tabular Model

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14
Q

Contains a horizontal and vertical axis

A

Line Graph

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15
Q

Provides a complete visual explanation of how a complete national economic system functions

A

Circular Flow Model

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16
Q

Land, labor, capital, and entrepreneurship

A

Factors of Production

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17
Q

The payment made on borrowed money

A

Interest

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18
Q

When government spending exceeds what it receives in taxes

A

Budget Deficit

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19
Q

The difference between revenues received and cost that go into production

A

Profit

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20
Q

All payments for labor

A

Wages

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21
Q

The activity of creating new and useful goods and services

A

Consumption Expenditures

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22
Q

Household spending on goods and services

A

Principal of Diminishing Marginal Utility

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23
Q

A graph that shows alternative ways to use an economy’s resources

A

Production Possibilities Curve

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24
Q

The willingness of consumers to purchase a product and the actual act of purchasing it

A

Demand

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25
Q

Goods that experience an increase in demand because of an increase in consumer income

A

Normal Goods

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26
Q

Goods that households may use in place of others

A

Substitute Good

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27
Q

Goods that are usually purchased or used together

A

Complementary Goods

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28
Q

Items that see a decline in sales as consumer income increases

A

Inferior Goods

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29
Q

When a demand curve shifts to the left or the right

A

Change in Demand

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30
Q

When the government dictates that prices may not rise any higher

A

Price Ceilings

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31
Q

A barrier that prevents prices from falling below the market price

A

Price Floor

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32
Q

The price at which consumers are willing to take from the market the exact quantity of a product that suppliers will put in the market

A

Market Equilibrium Price

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33
Q

The willingness of businesses to produce more of their product at any given price

A

Increase in Supply

34
Q

Supply fluctuations

A

Changes in Supply

35
Q

What is the difference between and economic and opportunity cost?

A

Economic cost is the value people place on a good or service and is reflected by its price. Opportunity cost is the satisfaction a person gives up or the regret experienced by not choosing differently

36
Q

Why do insatiability and scarcity necessitate choice?

A

Choices are necessary because they pull a person in opposite directions. Both cannot be satisfied.

37
Q

Explain and give an example of any three of the following: good, service, free good, nuisance good, economic good, economic service, free service.

A

Good: any tangible thing that has a measurable lifespan - a textbook
Service: intangible items - work of a teacher
Free good: goods with a price tag of 0 - air

38
Q

What is the difference between microeconomics and macroeconomics? Give examples of each.

A

Micro: choices made by individual units - what causes a person to save money?
Macro: large scale economic choices - what causes bank interest rates to rise and fall?

39
Q

What character quality is essential for the Christian to have victory over insatiability?

A

Contentment

40
Q

What are two purposes for economic models?

A

Instruction and prediction of future events

41
Q

For an economist, what is the primary value of a production possibilities curve?

A

A PPC enables the economist to see the maximum feasible amounts that a business can produce with its limited resources

42
Q

Name the four factors or production or the four payments businesses make in exchange for the factors of production.

A

Land, labor, capital, entrepreneurship

Rent, wages, interest, profit

43
Q

Why is the financial market necessary for the effective functioning of a developed society?

A

Financial market takes the savings of households and channels them to businesses so that the financial capital can help business firms operate effectively

44
Q

With what economic principle do we most often associate Ludwig vos Mises?

A

Free Market

45
Q

Who identified the principle of diminishing marginal utility?

A

William Stanley Jevons

46
Q

State the law of demand

A

Everything else being held constant, the lower the price charged for a good or service, the greater the quantity people will demand and vise versa

47
Q

When an individual makes a decision at the margin, how does he determine the amount to obtain?

A

The individual chooses to obtain the amount at which the marginal benefit just offsets the marginal cost

48
Q

What four conditions may change the demand for a product?

A

Change in people’s incomes
Change in the price of related goods
Change in peoples taste and preferences
Change in people’s expectations

49
Q

What are the three fictions of prices?

A

Transmit info, provide incentives, redistribute income

50
Q

State the law of supply.

A

The higher the price buyers a willing to pay, other things being constant, the greater the quantity a supplier will be willing to produce and the inverse is true

51
Q

What occurs when the price of a product is higher than the price at which supply equals demand?

A

Surplus

52
Q

What is the simplest solution to a surplus?

A

The producer lowers the price until the quantity demanded equals the quantity he has to supply

53
Q

Which way does a supply curve slope and why?

A

Upward to the right indicating that the greater the price buyers are willing to pay for the product the greater quantity firms will supply

54
Q

What three factors could lead to a change in supply?

A

Changes in technology
Change in production cost
Changes in the prices of related goods

55
Q

Opportunity benefit is the regret you feel over a choice you made.

A

False

56
Q

Positive economics refers to making value judgements about existing or proposed economic policies.

A

False

57
Q

Normative economics observes economic choices and predicts economic events.

A

False

58
Q

Menger proposed that an individual’s decisions are based on personal utility.

A

True

59
Q

Economics is considered a science.

A

True

60
Q

A line graph provides more data than a tabular model.

A

True

61
Q

On a PPC, the point on the curve represents inefficient production.

A

False

62
Q

Financial capital is the tool that business firms use to produce goods and services.

A

False

63
Q

Entrepreneurship is the most important factor of production.

A

True

64
Q

Transfer payments involve the government.

A

True

65
Q

If the government receives less in taxes than it is paying out, it is operating under a budget surplus.

A

False.

66
Q

Dissaving is any time households withdraw money from an account or borrow it.

A

True

67
Q

Crowding out has nothing to do with governmental budget deficits.

A

False

68
Q

A financial market is the collection of a nation’s financial institutions.

A

True

69
Q

Inferior goods increase in sales as consumer income increases.

A

False

70
Q

When a demand curve stays the same, economists say that the product is experiencing a change in demand.

A

False

71
Q

Whenever a change in price cause a change in the number of items demanded, a change in quantity demanded has occurred.

A

True

72
Q

US currency is currently based on gold and silver.

A

False

73
Q

According to the World Factbook, the USA now has the 3rd largest GDP (gross domestic product) in the world.

A

True

74
Q

The principal of diminishing marginal utility states that people tend to receive less and less additional satisfaction from any good or service as they receive more and more of it during a specific period of time.

A

True

75
Q

Complementary goods work best when separated.

A

False

76
Q

China has the largest GDP in the world.

A

True

77
Q

The average American has no idea how bad our debt situation is.

A

True

78
Q

A shift to the right on a supply schedule generally means that a decrease in supply has occurred.

A

False

79
Q

When a supply schedule is plotted on a graph, it is called a supply curve.

A

True

80
Q

Supply is the amount of goods and services business firms are willing and able to provide at different prices.

A

True

81
Q

The point at which buyers and sellers disagree is called the Market Equilibrium point.

A

False

82
Q

A surplus is an excess of unsold products

A

True

Econ (5 decks)

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