Unit 1 (Principles of Economics) Flashcards

1
Q

What is marginal benefit?

A

What you get for one more of that good

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2
Q

What is opportunity cost?

A

the loss of potential gain from other alternatives when one alternative is chosen

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3
Q

What are trade offs?

A

when you choose one thing, you are going to lose another

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4
Q

What do incentives cause?

A

unintended consequences

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5
Q

What is the invisible hand of the marketplace?

A

It leads firms and households interacting with the market to desired outcomes

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6
Q

What are the two main causes of market failure?

A

Externality and market power

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7
Q

What is externality?

A

Aside effect or consequence of an activity that is not reflected in the cost of that activity

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8
Q

What is market power?

A

The level of ability a country has to control prices of a product (example: Canada has only 3 telemarketing services)

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9
Q

Why is productivity important?

A

Productivity = better standard of living, health care, longer life expectancy, luxury, etc.

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10
Q

What is inflation?

A

The overall increase of prices within the economy

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11
Q

What causes inflation?

A

When a country produces too much money (the more money produced the less value it holds)

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12
Q

How are inflation and unemployment related?

A

Both of these things are part of the business cycle meaning they are both irregular and unpredictable activities

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13
Q

When unemployment is low…

A

inflation and prices go up to keep up with high demand

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14
Q

When unemployment is high…

A

prices and inflation decrease because demands for goods for lower

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15
Q

Define efficiency

A

When a society is getting the most from their resources

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16
Q

Define property rights

A

The ability of an individual to own and exercise control over scarce resources

17
Q

Define a monopoly

A

When there is only one seller in the market

18
Q

Define equality

A

The property of distributing economic prosperity uniformly among society’s members

19
Q

Define rational

A

Doing the best you can to achieve objectives

20
Q

Define marginal change

A

An incremental adjustment to an existing plan

21
Q

Economics is the study of…?

A

How society manages its scarce resources

22
Q

A rational person does not act unless.. (hint: marginal)

A

The action produces marginal benefits that exceed marginal costs

23
Q

What happens when a country raises taxes and increases welfare payments

A

improves equality at the expense of efficiency

24
Q

What is the benefit of foreign trade?

A

It allows a country to have a greater variety of products at a lower cost than if it tried to produce everything at home