Podcast
Questions and Answers
A company is deciding whether to invest in a new project. Using marginal thinking, which factor should they primarily consider?
A company is deciding whether to invest in a new project. Using marginal thinking, which factor should they primarily consider?
- The initial investment already made in the company.
- The average cost of all projects the company has undertaken in the past.
- The total revenue the company currently generates.
- The potential additional revenue from the new project compared to its additional costs. (correct)
A country can produce either wheat or corn. If they choose to produce wheat, the opportunity cost is:
A country can produce either wheat or corn. If they choose to produce wheat, the opportunity cost is:
- The amount of corn they could have produced. (correct)
- The market price of the wheat.
- The resources used in wheat production.
- The money spent on producing the wheat.
Which scenario best illustrates the economic concept of scarcity?
Which scenario best illustrates the economic concept of scarcity?
- A government increases taxes to fund public education.
- A family must decide how to spend its limited vacation fund. (correct)
- A store runs a 'buy one, get one free' promotion to clear out excess inventory.
- A company decides to automate its production process to increase output.
A local bakery lowers the price of its bread. According to basic economic principles, what is the likely immediate impact on the quantity supplied?
A local bakery lowers the price of its bread. According to basic economic principles, what is the likely immediate impact on the quantity supplied?
In a market, if the current price is set above the equilibrium price, what is the likely result?
In a market, if the current price is set above the equilibrium price, what is the likely result?
Suppose there is a significant technological advancement in the production of smartphones. How will this likely affect the equilibrium price and quantity of smartphones?
Suppose there is a significant technological advancement in the production of smartphones. How will this likely affect the equilibrium price and quantity of smartphones?
If consumers expect the price of gasoline to rise significantly next week, how will this expectation likely affect the current market for gasoline?
If consumers expect the price of gasoline to rise significantly next week, how will this expectation likely affect the current market for gasoline?
Which of the following scenarios would cause a country's Production Possibilities Frontier (PPF) to shift outwards?
Which of the following scenarios would cause a country's Production Possibilities Frontier (PPF) to shift outwards?
Which of the following scenarios would most likely lead to an increase in real GDP?
Which of the following scenarios would most likely lead to an increase in real GDP?
If a country's nominal GDP increased by 5% while the GDP deflator increased by 2%, what is the approximate percentage change in real GDP?
If a country's nominal GDP increased by 5% while the GDP deflator increased by 2%, what is the approximate percentage change in real GDP?
Which of the following is an example of a positive economic statement?
Which of the following is an example of a positive economic statement?
In the context of a Production Possibilities Frontier (PPF), what does a point located inside the PPF represent?
In the context of a Production Possibilities Frontier (PPF), what does a point located inside the PPF represent?
Which of the following would be primarily studied within the field of macroeconomics?
Which of the following would be primarily studied within the field of macroeconomics?
In an imperfect market, what is the most likely outcome?
In an imperfect market, what is the most likely outcome?
During a period when the economy is experiencing a contraction, what would you expect to happen to real GDP and unemployment?
During a period when the economy is experiencing a contraction, what would you expect to happen to real GDP and unemployment?
A study finds a strong correlation between ice cream sales and crime rates. Using ceteris paribus, which conclusion is most appropriate?
A study finds a strong correlation between ice cream sales and crime rates. Using ceteris paribus, which conclusion is most appropriate?
Flashcards
Real GDP
Real GDP
Real GDP increases when quantities of goods and services rise over time.
Nominal GDP
Nominal GDP
The value of economic output without adjusting for price changes.
GDP deflator
GDP deflator
An index measuring average prices of all final goods and services in GDP.
Business cycles
Business cycles
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Production Possibilities Frontier (PPF)
Production Possibilities Frontier (PPF)
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Points inside PPF
Points inside PPF
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Points on PPF
Points on PPF
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Positive statement
Positive statement
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Scarcity
Scarcity
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Incentive
Incentive
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Opportunity Cost
Opportunity Cost
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Marginal Thinking
Marginal Thinking
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Equilibrium
Equilibrium
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Surplus
Surplus
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Shortage
Shortage
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Study Notes
Economic Concepts
- Scarcity: Forces choices due to limited resources.
- Incentives: Motivate actions, direct or indirect.
- Opportunity Cost: Value of the next best alternative when making a choice.
- Marginal Thinking: Evaluating extra benefits or costs of additional units.
- Voluntary Trade: Can improve outcomes for all involved parties.
- Quantity Supplied: Changes with price alterations.
- Equilibrium: Intersection of supply and demand, market stability.
- Surplus (Price above Equilibrium): Downward pressure on price, excess supply.
- Shortage (Price below Equilibrium): Upward pressure on price, excess demand.
- Input Price Decrease: Lower equilibrium price, higher quantity.
- Substitute Good Price Decrease: Lower equilibrium price and quantity of the original good.
- Recession: Lower equilibrium price and quantity of normal goods.
- Expected Future Price Increase: Decreases today's supply, raises equilibrium price.
- Real GDP: Measures economic output adjusted for price changes.
- Real GDP Increase: Result of increasing quantities of output.
- Nominal GDP: Economic output without price adjustment.
- GDP Deflator: Average price index of all goods and services in GDP.
- GDP Measurement Limitations: Ignores environmental quality.
- Business Cycles: Short-term fluctuations in economic activity, above or below long-term trend.
- Production Possibilities Frontier (PPF): Illustrates trade-offs between two goods, using fixed labor.
- Points Inside PPF: Inefficient utilization of resources.
- Points on PPF: Efficient allocation of resources.
- Points Outside PPF: Currently unattainable production levels.
- PPF Slope: Represents opportunity cost, varying across the frontier.
- Unemployment on PPF: Shown as points inside the PPF.
- Positive Statement: Factual, testable claim.
- Normative Statement: Opinion or value judgment.
- Ceteris Paribus: "Other things being equal," assumption in economic analysis.
- Imperfect Markets: Buyers or sellers influence price.
- Microeconomics Focus: Individual and firm decisions.
- Macroeconomics Focus: Economy as a whole.
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Description
Explore fundamental economic principles such as scarcity, incentives, and opportunity cost. Understand market dynamics including supply, demand, equilibrium, surpluses, and shortages. Analyze the impact of various factors like input prices, substitute goods, and future price expectations on market outcomes.
