Principles of Economics

Question 1

Economics comes from the Greek word…

Answer 1

“Oikonomia” meaning household management

Question 2

What is the cost of what you give up for an item?

Answer 2

Opportunity cost

Question 3

It is the use of marginal quantities in determining an equilibrium

Answer 3

Marginalism

Question 4

It is the money that has been spent and cannot be recovered

Answer 4

Sunk Cost

Question 5

The maximum benefits from scarce resources

Answer 5

Efficiency

Question 6

It is wherein benefits are distributed uniformly

Answer 6

Equality

Question 7

It is the production of outputs in individual industries and businesses

Answer 7

Microeconomics

Question 8

It is the production of the national product or output

Answer 8

Macroeconomics

Question 9

Focuses of Macroeconomics (5)

Answer 9

International Economics
Financial Economics
Labor and Demographic
Law and Economics

Question 10

It is a small incremental adjustment to a plan of action

Answer 10

Marginal change

Question 11

It is the idea that market prices reflect both the value of a good to society and the cost of society of making that good

Answer 11

Adam Smith’s Invisible Hand

Question 12

When a market fails to produce an efficient allocation of resources

Answer 12

Market Failure

Question 13

The impact of a person’s actions on the well-being of a bystander

Answer 13

Externality

Question 14

The ability of a single person to influence market prices

Answer 14

Market power

Question 15

The number of goods and services produced by each unit of labor input

Answer 15

Productivity

Question 16

It means that goods are limited relative to desires

Answer 16

Scarcity

Question 17

Most effective use of a society’s resources in satisfying unlimited wants and needs

Answer 17

Efficiency

Question 18

set of assertions and assumptions are chosen to consist of the main framework of analysis

Answer 18

Construction of a Model

Question 19

Tries to represent in a quantitative way how economic behavior is influenced by certain relevant events

Answer 19

Simple Mathematical Equation/Expression

Question 20

Provide a pictorial version of how economics agents behave as their opportunities and constraint change

Answer 20

Graphs

Question 21

Because of scarcity, every society must have a way of determining…

Answer 21

What commodities to produce
How these goods are made and
For whom they are produced

Question 22

It describes facts of an economy

Answer 22

Positive economics

Question 23

It involves judgment in describing the economy

Answer 23

Normative economics

Question 24

what they do best

Answer 24

specialization

Question 25

increase in the overall level of prices in the economy

Answer 25

Inflation

Question 26

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

Answer 26

Circular-Flow Diagram

Question 27

A graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology

Answer 27

Production Possibilities Frontier

Question 28

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

Answer 28

Absolute Advantage

Question 29

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

Answer 29

comparative advantage

Question 30

Specialization and free trade will benefit all trading parties, even when some are absolutely more efficient producers

Answer 30

“Theory of Comparative Advantage” from David Ricardo

Question 31

commodities or services that are used to produce goods and services

Answer 31

Inputs

Question 32

various useful goods or services that result from production process and are either consumed or employed in further production

Answer 32

Outputs

Question 33

Factors of Production

Answer 33

Land
Labor
Capital

Question 34

what is an efficient economy?

Answer 34

one that produces the things that people want at the least possible cost

Question 35

it occurs when an economy cannot produce more of one good without producing less of the other

Answer 35

Productive Efficiency

Question 36

Inefficiency and unemployed resources

Answer 36

Inward Shift

Question 37

Increased in a total output of an economy

Answer 37

Economic Growth; Outward Shift

Question 38

anything that has already been produced will be used to produce other valuable goods or services over time

Answer 38

Capital Goods

Question 39

Produced for present consumption

Answer 39

Consumer Goods

Question 40

Economic Growth happens because of 2 important resources:

Answer 40

Accumulation of Wealth

Technological Advances

Question 41

economy in which central government either directly or indirectly sets output targets, incomes, and prices

Answer 41

Command Economy

Question 42

holds that government should interfere as little as possible in the economic affairs and leave economic decision to the private decision making of buyers and sellers

Answer 42

Free Market

Question 43

where markets direct the detailed activities of day-to-day economic life while government regulates social conditions and provides pensions, health care, and other necessities to the poor families

Answer 43

Mixed economy

Question 44

a mechanism through which buyers and sellers interact to determine prices and exchange goods and services

Answer 44

Market

Question 45

coordinates the decisions of producers and consumers in the market

Answer 45

price

Question 46

harmony between private profit and public interest

Answer 46

the invisible hand