modul 3 Flashcards
Can you give examples of labor, capital, and natural resources?
Examples of labor include workers in factories and farms. Examples of capital include machinery and tools. Examples of natural resources include water and minerals.
How can natural resources be used to produce goods and services?
Natural resources can be used to produce goods and services by extracting and utilizing them in various production processes.
Explain the role of labor, capital, and natural resources in the economy’s factors of production.
Labor refers to the physical and mental effort exerted by individuals in the production process. Capital refers to the tools, equipment, and infrastructure used in production. Natural resources are the raw materials obtained from the environment that are used in production.
Which factor of production refers to human effort that can be applied to production?
labor
Which factor of production refers to the physical and mental effort exerted by humans in the production process?
labor
______ are the resources of nature that can be used for the production of goods and services
Natural resources
How can the amount of labor available in an economy be increased?
Finding new uses for resources
Discovering new natural resources
Discovering new ways to extract natural resources
Transportation equipment, such as cars and trucks, is an example of ______
capital
What is an example of capital as a factor of production?
Machinery
The three factors of production are ______, capital, and natural resources.
labor
What is an example of capital?
Office buildings
Which of the following is an example of natural resources?
oil
Which of the following is an example of labor?
A piece of land
A computer software
A factory building
What is the concept of utility in economics?
Utility refers to the satisfaction or usefulness that a consumer derives from consuming a good or service.
What is the role of technology in utilizing the economy’s factors of production?
Enhancing the efficiency of production
What are examples of natural resources?
Things found in nature that can be used for production
How can we distinguish between efficient and inefficient production using the production possibilities model?
Efficient production occurs on the production possibilities curve, while inefficient production occurs inside the curve.
What does the slope of a production possibilities curve measure?
The opportunity cost of an additional unit of the good on the horizontal axis
What does the absolute value of the slope of a production possibilities curve represent?
The opportunity cost of an additional unit of the good on the horizontal axis
What are the implications of the downward slope and bowed-out shape of the production possibilities curve?
The downward slope indicates the trade-off between producing more of one good at the expense of the other, while the bowed-out shape represents increasing opportunity costs.
The production possibilities curve is a ___-sloping straight line.
downward
A production possibilities curve that is bowed-out in shape demonstrates the __.
law of increasing opportunity cost
How can full employment and situations of idle factors of production be distinguished using the production possibilities model?
Full employment is represented by a point on the production possibilities curve, while situations of idle factors of production are represented by points inside the curve.
The opportunity cost of producing an additional snowboard at Plant 1 equals the ______ of the slope of the production possibilities curve.
absolute value
What is the relationship between the slope of a production possibilities curve and the opportunity cost of producing an additional snowboard at Plant 1?
The slope represents the opportunity cost of producing an additional snowboard
What is the implication of the downward slope and bowed-out shape of the production possibilities curve?
It shows that resources are not fully utilized and there are idle factors of production
What is the concept of the production possibilities curve?
A graph that shows the maximum combination of goods and services that can be produced given limited resources and technology
What does the bowed-out shape of the production possibilities curve imply?
The curve represents a negative relationship between two goods
Comparative advantage can stem from a lack of ______ in the production of an alternative good.
efficiency
What does the bowed-out shape of the production possibilities curve represent?
Increasing opportunity cost
What does the downward slope of the production possibilities curve indicate?
The scarcity of the plant’s capital and labor
What does the law of increasing opportunity cost state?
As an economy produces more of a particular good, the opportunity cost of additional units of that good will increase
Specialization is related to the ______ model.
production possibilities
How can you distinguish between efficient and inefficient production using the production possibilities model?
Efficient production is represented by points on the production possibilities curve, while inefficient production is represented by points inside the curve.
What does it mean for an economy to have a comparative advantage in producing a good or service?
It has the lowest opportunity cost of producing that good or service compared to any other economy
What is a production possibilities curve?
A graphical representation of the alternative combinations of goods and services an economy can produce
What choices did countries make in allocating resources for security and national defense after the 9/11 attacks?
Countries increased their spending on national security and defense, which resulted in a reduction in the production of other goods and services.
What does the law of increasing opportunity cost state?
As the economy moves along the production possibilities curve, the opportunity cost of producing one good increases
Explain the concept of comparative advantage in the production of goods and services.
Comparative advantage refers to the ability of an economy to produce a good or service at a lower opportunity cost compared to other goods or services.
What does the production possibilities curve suggest about the allocation of factors of production?
Allocation should be based on comparative advantage
In the production possibilities model, we assume that the economy can produce ____ goods.
two
What does the production possibilities model assume about the economy?
The economy can produce two goods
When an economy is operating on its production possibilities curve, it is engaging in __ production.
efficient
What is the result of allocating factors of production on a basis other than comparative advantage?
inefficient production
The bowed-out shape of the production possibilities curve results from allocating resources based on ______ advantage.
comparative
A movement from point A to point B on the production possibilities curve requires shifting resources out of the production of all other goods and __.
services
When an economy moves from producing inside the production possibilities curve to producing on the curve, it can lead to an improvement in the __ of living.
standard
What is the relationship between producing on the production possibilities curve and the standard of living?
Producing on the curve leads to an improvement in the standard of living
What is one reason why an economy might operate inside its production possibilities curve?
The economy fails to use all of its available resources
What is the opportunity cost of increasing spending on security?
Decreased production of other goods and services
What does the bowed-out shape of the production possibilities curve result from?
Allocating resources based on comparative advantage
What is the law of increasing opportunity cost?
The law of increasing opportunity cost states that as an economy moves along the production possibilities curve, the opportunity cost of producing additional units of a good increases.
What does it mean when an economy operates inside its production possibilities curve?
Factors of production are not fully utilized
Explain the relationship between the production of one good and the reduction in the production of another good.
In the production possibilities model, an increase in the production of one good implies a reduction in the production of the other good.
What does the downward slope of the production possibilities curve imply?
The opportunity cost of producing one good increases as more of it is produced
An economy that fails to make full and efficient use of its factors of production will operate ______ its production possibilities curve.
inside
What is the relationship between the production of one good and the reduction in the production of another good?
The production of one good leads to a decrease in the production of another good
What does specialization imply?
Comparative advantage is present
What happens to the production of one good when there is an increase in the production of another good?
it decreases
What is the relationship between full employment and an economy’s ability to operate on its production possibilities curve?
Full employment allows an economy to operate on its production possibilities curve
What is the impact of idle factors of production on an economy’s production possibilities?
Idle factors of production result in a level of production that lies inside the production possibilities curve.
What does the law of increasing opportunity cost imply?
Allocation is necessary for efficiency
How is economic growth defined in terms of the production possibilities model?
Economic growth is the increase in the production possibilities curve, which represents the ability to produce more goods and services over time.
What is economic growth in terms of the production possibilities model?
Economic growth is the increase in the quantity of goods and services available to people over time.
What are the assumptions of the world production possibilities curve?
The assumptions of the world production possibilities curve include linear production possibilities curves for each continent and the combination of these curves to create a world production possibilities curve.
What factors make economic growth possible according to the production possibilities model?
Technological progress and resource allocation.
What factors have contributed to U.S. economic growth in the past half century?
Increases in capital and labor quantities
A nation’s trade policy has nothing to do with its level of employment of its ______ of production.
factors
What factors contribute to economic growth?
Technological progress
What is the argument for unrestricted international trade?
Unrestricted trade promotes greater production of goods and services
What is the main contributor to higher economic growth according to economist Dale Jorgenson?
Development of information technology
What is the argument for unrestricted international trade in terms of economic specialization and comparative advantage?
Unrestricted international trade allows countries to produce more goods and services by specializing in activities in which they have a comparative advantage.
What is the relationship between trade and employment?
Trade requires shifts in resources from one activity to another
What has helped shift the countries’ production possibilities curve outward?
Increases in factor quality and technology
What is the role of government in different economic systems?
The government plays a significant role in a mixed economy.
What factors contributed to the increase in economic growth between the 1989 to 1995 period and the 1995 to 2002 period?
Better-quality capital and better technology
How does trade impact employment in the context of production possibilities curves?
Trade redistributes employment between different sectors, but does not affect overall employment levels.
What percentage of economic growth in the period of 1995-2002 was explained by improvements in factor quality and technology?
705
Comparative advantage requires each nation to specialize in activities in which it has a ______ advantage.
comparative
The world production possibilities curve assumes that resources are allocated between ______ and food production based on comparative advantage.
computer
What is economic growth?
An increase in the physical quantity or quality of factors of production
According to the reading, what is the argument for unrestricted international trade?
Unrestricted trade allows for the production of more goods and services.
An increase in the physical quantity or in the quality of factors of production available to an economy or a technological gain will allow the economy to produce more goods and services; it will shift the economy’s production possibilities __
curve
What is the relationship between trade and employment in the context of production possibilities curves?
Trade leads to increased employment
How has technology impacted economic growth?
Technological progress has helped shift the countries’ production possibilities curve outward and fuel economic growth.
The increase in the rate of economic growth between the 1989 to 1995 period and the 1995 to 2002 period is largely explained by better-quality _
capital
What is the relationship between technological progress and economic growth?
Technological progress increases economic growth
In a mixed economic system with extensive government regulation, what might be prohibited?
Transferring resources for comparative advantage
The greater the degree of economic ______ a country permits, the greater the amount of income per person it will generate.
freedom
Which economic systems are considered to be at the command socialist end of the spectrum?
North Korea and Cuba
Why do decision makers throughout the economy want to achieve efficiency in production?
To maximize profits
Based on the reading, what is the relationship between economic freedom and per capita income?
Countries with higher economic freedom tend to have higher per capita incomes
What is the relationship between economic growth and policies to encourage growth?
Policies to encourage growth generally involve postponing consumption to increase capital and human capital.
What is the trade-off between current consumption and future production for achieving greater growth?
The trade-off between current consumption and future production for achieving greater growth involves sacrificing present consumption in order to invest in capital goods or human capital that will lead to higher production and consumption in the future.
How does government regulation impact resource allocation and efficiency in mixed economic systems?
Government regulation can have implications on resource allocation and efficiency in mixed economic systems.
What is the concept of postponing current consumption for future productivity enhancement?
Spending time building capital instead of engaging in consumption
How does increased human capital contribute to economic growth?
Increased human capital often requires the postponement of consumption, such as investing time in education or training. This investment in human capital enhances future productivity and leads to economic growth.
Which organization conducts an annual comparison of economic freedom in various countries?
The Heritage Foundation and The Wall Street Journal
What is the role of government in a market economy?
Government plays a crucial role in any market economy.
What is the concept of comparative advantage and its role in market economies?
Comparative advantage refers to the ability of a country to produce a good or service at a lower opportunity cost than other countries, and it plays a role in determining trade patterns in market economies.
What does the production possibilities model in a market economy rely on to determine which combinations of goods and services will be produced?
Individual buyers and sellers
What factors determine where an economy lies on the economic systems spectrum?
Extent of government regulation
Extent of private ownership
Extent of government involvement
One key to growth is the willingness to wait, to postpone current consumption in order to enhance future __.
productive capability
What are the factors that contributed to the global shift towards market capitalist economic systems in the 1980s and 1990s?
Greater individual freedom
What is the relationship between market capitalist economies and mixed or command socialist economies?
Market capitalist economies have generally proved more productive than mixed or command socialist economies.
What factors contribute to the global shift towards market capitalist economic systems in the 1980s and 1990s?
Decreased government regulation
In a command socialist system, individuals are unlikely to __ from the efficient use of resources.
profit
The global shift towards _ economic systems occurred in the 1980s and 1990s.
market capitalist
According to the reading, what does the relationship between economic freedom and income suggest?
Greater economic freedom leads to higher incomes
According to the reading, what factors are used to rank nations on their degree of economic freedom?
Degree of regulation of firms, tax levels, and restrictions on international trade
No economy represents a pure case of either market capitalism or __ socialism.
command
According to the reading, which type of economic system offers the greatest inducement to allocate resources on the basis of comparative advantage?
Market capitalist
How can economic systems be classified?
Economic systems can be classified as market capitalist, command socialist, or mixed, depending on the degree of government ownership and involvement in economic decision-making.
What is the relationship between capital goods production and future consumption?
Capital goods production enhances future consumption
