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Questions and Answers
The law of diminishing marginal utility implies that the more units of a good are consumed, the greater the utility derived from each additional unit.
The law of diminishing marginal utility implies that the more units of a good are consumed, the greater the utility derived from each additional unit.
False
A progressive tax system imposes lower tax rates on higher income levels.
A progressive tax system imposes lower tax rates on higher income levels.
False
The opportunity cost of an action is the value of the best alternative given up.
The opportunity cost of an action is the value of the best alternative given up.
True
Gross Domestic Product (GDP) measures the total value of goods and services produced outside a country's borders.
Gross Domestic Product (GDP) measures the total value of goods and services produced outside a country's borders.
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Externalities are costs or benefits that are directly incurred by the parties involved in a transaction.
Externalities are costs or benefits that are directly incurred by the parties involved in a transaction.
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A demand curve sloping downward and to the right implies that as price increases, quantity demanded decreases.
A demand curve sloping downward and to the right implies that as price increases, quantity demanded decreases.
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Perfect competition is characterized by a few firms selling differentiated products.
Perfect competition is characterized by a few firms selling differentiated products.
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The scarcity of resources is the root cause of economic problems.
The scarcity of resources is the root cause of economic problems.
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A recession is immediately followed by an expansion in an economic cycle.
A recession is immediately followed by an expansion in an economic cycle.
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The difference in value of goods that a country imports and exports is called the balance of trade.
The difference in value of goods that a country imports and exports is called the balance of trade.
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A model can only deviate from equilibrium if there is no change disrupting its steady state.
A model can only deviate from equilibrium if there is no change disrupting its steady state.
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The demand for normal goods is inversely related to consumers' incomes.
The demand for normal goods is inversely related to consumers' incomes.
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Study Notes
Market Structure
- In perfect competition, many firms sell identical products.
Scarcity and Price
- Scarcity gives rise to price.
Business Cycle
- When an economy reaches the peak of its expansion, it is immediately followed by a trough.
International Trade
- The difference in value of goods a country sells abroad compared to those it purchases from other countries is called a trade balance, not a purchasing balance.
Equilibrium
- Equilibrium is the balanced state of a model where all forces described by the model are in balance.
- A model only deviates from equilibrium if a change disrupts its steady state.
Economic Systems
- State capitalism is a system in which the government controls most of the capital.
Factors of Production
- According to economists, the factors of production are scarce.
Microeconomics
- The subject of government's role in an economy is part of the field of macroeconomics, not microeconomics.
Demand and Supply
- An effective advertising campaign for a product would cause a change in demand, not quantity demanded.
- The demand for inferior goods is inversely related to consumers' incomes.
- When income increases, demand for inferior goods decreases.
- If the price of a good rises, consumers will generally decrease the amount they buy.
Opportunity Cost
- Opportunity cost refers to the value of the next best alternative foregone when making a decision.
Monetary Policy
- Monetary policy is primarily controlled by the central bank (not Banko Sentral ng Pilipinas, which is the central bank of the Philippines).
Production and Consumption
- All people are consumers, and some are also producers.
Health Economics
- The goal of the World Health Organization (WHO) is to ensure that more people will have universal health coverage and provide them with better health and well-being.
Needs and Wants
- Needs are what we need to survive, while wants are things we just want.
Inflation
- Inflation occurs when the general price level increases over time, not decreases.
Demand Curve
- A demand curve slopes downward and to the left, not downward and to the right.
Utility
- The law of diminishing marginal utility states that as a person consumes more of a good, the additional satisfaction (utility) from each additional unit decreases.
- The more of a product a person consumes per time period, other things constant, the smaller will be the addition to total utility.
Taxation
- A progressive tax system imposes higher tax rates on higher income levels.
Opportunity Cost
- In economic terms, weighing the two options to choose what you want is known as a trade-off.
- What you sacrifice by choosing each option is known as the opportunity cost.
- The opportunity cost of going to the movie is the value foregone of all feasible alternative actions.
National Income Accounting
- Gross Domestic Product (GDP) measures the total value of all goods and services produced within a country's borders.
Externalities
- Externalities are costs or benefits that spill over to third parties not directly involved in a transaction.
Studying That Suits You
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Description
Test your knowledge of health economics concepts with this quiz consisting of true or false questions. Make sure to submit your answers within the given time limit and only answer with TRUE or FALSE. Total points available: 44 out of 50.
