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ECON 101 - Microeconomics > Test 1 > Flashcards

Test 1 Flashcards

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1
Q

Scarce resource

A

A good that is in limited supply

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2
Q

What is the study of economics?

A

How people allocate scarce resources

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3
Q

What are the three major resources?

A

Land
Labor
Capital

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4
Q

Difference between macro & micro

A

Macro - decision making for the economy

Micro - decision making by individuals

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5
Q

What is opportunity cost?

A

The cost of the BEST alternative forgone as a result of making a given choice

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6
Q

What is the production possibility curve?

A

A curve that shows the maximum combinations production trade offs given a fixed amount of resources

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7
Q

Law of increasing opportunity cost

A

Resources become more scarce when used to produce the alternative good

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8
Q

Factors shifting the production possibilities curve

A

Technological improvement
Education
Population growth

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9
Q

Individual demand curve

A

The relationship between price & the amount consumed

The demand curve slopes down (inverse relationship)

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10
Q

Determinants of demand

A 
Price of good (movement along demand curve) 
Price of substitutes & complements (shift)
Consumer income (for a normal good the shift will go up)
Consumer taste (shift)
Price expectations (shift)
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11
Q

Individual producers supply curve

A

Relationship between price & amount produced

The supply curve slopes up

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12
Q

Determinants of supply

A

Price of the good (causes a movement along the supply curve)
Cost of resources (shift)
Excise tax (shift) a direct tax on production
Price expectations on resources
Technology

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13
Q

Effects of demand curve shifts on market equilibrium

A

Increase demand results in a higher equilibrium price & quantity demanded

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14
Q

Effects of supply curve shifts on market equilibrium

A

Increased supply results In a lower equilibrium price& higher quantity demanded

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15
Q

Government intervention

A 
Price ceiling (Max price producer can charge)
Price floor (min price producer can charge)
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ECON 101 - Microeconomics (9 decks)

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