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Questions and Answers
What is the highest-valued alternative that is given up when choosing to produce or consume one good over another?
What is the highest-valued alternative that is given up when choosing to produce or consume one good over another?
Opportunity cost
What combinations are attainable given a consumer's budget line?
What combinations are attainable given a consumer's budget line?
- Involves entire consumption (correct)
- Fall on budget line (correct)
- Fall inside budget line (correct)
- On midpoint of budget line (correct)
A consumer's ___________ line or constraint shows various combinations of two products that can be purchased with a specific amount of income.
A consumer's ___________ line or constraint shows various combinations of two products that can be purchased with a specific amount of income.
budget
Economics, as a social science, is concerned with how to make money.
Economics, as a social science, is concerned with how to make money.
________ is the notion that, in general, the quantity desired of economic goods (or services) exceeds the quantity available.
________ is the notion that, in general, the quantity desired of economic goods (or services) exceeds the quantity available.
Which of the following describes the concept of rational self-interest?
Which of the following describes the concept of rational self-interest?
What type of economics exemplifies the trade deficit between the U.S. and China growing between 2000 and 2009?
What type of economics exemplifies the trade deficit between the U.S. and China growing between 2000 and 2009?
What type of economics is illustrated by Chase Bank lowering its interest rate on business loans?
What type of economics is illustrated by Chase Bank lowering its interest rate on business loans?
What economic concept is represented by the real GDP growing by 2.2 percent in 2007?
What economic concept is represented by the real GDP growing by 2.2 percent in 2007?
What economic event caused the price of oranges to rise due to an unexpected freeze?
What economic event caused the price of oranges to rise due to an unexpected freeze?
What reflected an example of macroeconomics when the Consumer Price Index rose by 3 percent in 2007?
What reflected an example of macroeconomics when the Consumer Price Index rose by 3 percent in 2007?
What type of economics is shown by a U.S. software firm laying off workers and transferring work to India?
What type of economics is shown by a U.S. software firm laying off workers and transferring work to India?
The three main decisions that must be addressed by an economic system include what goods are to be produced, who will produce them, and where they will be produced.
The three main decisions that must be addressed by an economic system include what goods are to be produced, who will produce them, and where they will be produced.
__________ is the discipline of economics concerned with individual units such as a person, household, firm, or industry.
__________ is the discipline of economics concerned with individual units such as a person, household, firm, or industry.
What branch of economics studies the economy as a whole or in the aggregate?
What branch of economics studies the economy as a whole or in the aggregate?
The economic question of '__________ to produce' is about decisions related to the mix (quantity and type) of goods and services to make available in a given economy.
The economic question of '__________ to produce' is about decisions related to the mix (quantity and type) of goods and services to make available in a given economy.
Which of the following are all possible because of private property rights in a market system?
Which of the following are all possible because of private property rights in a market system?
An _______ outcome is one each individual affected is treated fairly.
An _______ outcome is one each individual affected is treated fairly.
Economics assumes that human behavior reflects '_______ self-interest.'
Economics assumes that human behavior reflects '_______ self-interest.'
When utilizing scarce resources to produce goods or services, there is a cost borne by society. What is this commonly referred to as?
When utilizing scarce resources to produce goods or services, there is a cost borne by society. What is this commonly referred to as?
In economics, an incremental or gradual change is also known as a _________.
In economics, an incremental or gradual change is also known as a _________.
Which of the following define positive economics?
Which of the following define positive economics?
Normative economics is based on what?
Normative economics is based on what?
Economics is a ________ science concerned with the allocation of __________ resources to meet the unlimited wants of the members of a given society.
Economics is a ________ science concerned with the allocation of __________ resources to meet the unlimited wants of the members of a given society.
Consumers derive personal satisfaction from goods and services by which of the following methods?
Consumers derive personal satisfaction from goods and services by which of the following methods?
What is the economic decision-making process considered rational when individuals do?
What is the economic decision-making process considered rational when individuals do?
_______ economics focuses on facts and cause and effect relationships.
_______ economics focuses on facts and cause and effect relationships.
In macroeconomics, an ________ is a collection of specific economic units treated as if they were one unit.
In macroeconomics, an ________ is a collection of specific economic units treated as if they were one unit.
Private property rights, coupled with the freedom to negotiate binding legal _______ enables individuals and businesses to obtain, use, and dispose of property resources as they see fit.
Private property rights, coupled with the freedom to negotiate binding legal _______ enables individuals and businesses to obtain, use, and dispose of property resources as they see fit.
_______ economic analysis concerns what is, whereas ___________ economic analysis represents subjective statements about what ought to be.
_______ economic analysis concerns what is, whereas ___________ economic analysis represents subjective statements about what ought to be.
Which of the following describes the role of government in the United States' form of capitalism?
Which of the following describes the role of government in the United States' form of capitalism?
When consumers purchase a good or service, they do so in order to _______ their level of utility or well-being.
When consumers purchase a good or service, they do so in order to _______ their level of utility or well-being.
A consumer will purchase a good or service when the marginal benefit is greater than or equal to what?
A consumer will purchase a good or service when the marginal benefit is greater than or equal to what?
The economic perspective focuses on _________; therefore, the decision-maker must compare incremental benefits and costs.
The economic perspective focuses on _________; therefore, the decision-maker must compare incremental benefits and costs.
Private property helps to facilitate exchange in which type of economic system?
Private property helps to facilitate exchange in which type of economic system?
Which of the following economic measures are considered in macroeconomic analysis?
Which of the following economic measures are considered in macroeconomic analysis?
Property rights encourage which of the following?
Property rights encourage which of the following?
Positive economics encourages value judgments.
Positive economics encourages value judgments.
Which of the following best clarifies the 'other-things-equal' assumption?
Which of the following best clarifies the 'other-things-equal' assumption?
Which of the following are issues most explored in microeconomics?
Which of the following are issues most explored in microeconomics?
Which of the following statements or questions represent positive economics?
Which of the following statements or questions represent positive economics?
When individuals take into account the costs and benefits of their economic decisions, these decisions are considered to be __________.
When individuals take into account the costs and benefits of their economic decisions, these decisions are considered to be __________.
Which of the following statements or questions represent normative economics?
Which of the following statements or questions represent normative economics?
Positive economics is concerned with _________, whereas normative economics deals with __________.
Positive economics is concerned with _________, whereas normative economics deals with __________.
Which of the following define ceteris paribus?
Which of the following define ceteris paribus?
In the type of capitalism practiced in the U.S. and most other countries, the government plays __________ role.
In the type of capitalism practiced in the U.S. and most other countries, the government plays __________ role.
In economics, the term __________ describes spending that pays for the production and accumulation of capital goods.
In economics, the term __________ describes spending that pays for the production and accumulation of capital goods.
The factors of production include which of the following?
The factors of production include which of the following?
In addition to entrepreneurship, the factor of production defined as __________ consists of the physical actions and mental activities that people contribute to the production of goods and services.
In addition to entrepreneurship, the factor of production defined as __________ consists of the physical actions and mental activities that people contribute to the production of goods and services.
The situation where one thing has to be given up in order to have some other item is called a:
The situation where one thing has to be given up in order to have some other item is called a:
Factories, storage, transportation and distribution facilities, as well as tools and machinery are all examples of physical ____________ goods.
Factories, storage, transportation and distribution facilities, as well as tools and machinery are all examples of physical ____________ goods.
From an economic standpoint, _______ includes all natural resources used in the production process.
From an economic standpoint, _______ includes all natural resources used in the production process.
Combinations of goods that fall on the production possibilities curve are:
Combinations of goods that fall on the production possibilities curve are:
What does a production possibilities curve (frontier) show?
What does a production possibilities curve (frontier) show?
Capital goods differ from consumer goods in that:
Capital goods differ from consumer goods in that:
Arable land, water machinery, and professional baseball players are all considered scarce economic __________ to production.
Arable land, water machinery, and professional baseball players are all considered scarce economic __________ to production.
Combinations of output that fall inside the production possibilities curve represent:
Combinations of output that fall inside the production possibilities curve represent:
Select all choices from the following that would be considered land to an economist.
Select all choices from the following that would be considered land to an economist.
Points lying _______ the production possibilities curve (frontier) would represent a greater but unachievable level of output than that at any point on the curve.
Points lying _______ the production possibilities curve (frontier) would represent a greater but unachievable level of output than that at any point on the curve.
Constant opportunity cost is best represented by:
Constant opportunity cost is best represented by:
As individuals' incomes rise, they will still be confronted with which of the following?
As individuals' incomes rise, they will still be confronted with which of the following?
Points _______ the production possibilities curve are attainable so long as an economy uses all of its available resources.
Points _______ the production possibilities curve are attainable so long as an economy uses all of its available resources.
A nation's production possibilities curve (frontier) can shift outward due to:
A nation's production possibilities curve (frontier) can shift outward due to:
In economics, investment describes spending:
In economics, investment describes spending:
What does each point on a production possibility represent?
What does each point on a production possibility represent?
Points lying _______ the production possibilities curve (frontier) are unattainable with the current availability of resources and technology.
Points lying _______ the production possibilities curve (frontier) are unattainable with the current availability of resources and technology.
Which of the following best describes the relationship between trade-offs and opportunity costs?
Which of the following best describes the relationship between trade-offs and opportunity costs?
The importance of the production possibilities model is to show the different combinations of goods and services that society can produce:
The importance of the production possibilities model is to show the different combinations of goods and services that society can produce:
What is specialization in economics?
What is specialization in economics?
What drives the law of increasing opportunity costs?
What drives the law of increasing opportunity costs?
As more and more of a particular good is produced, which of the following rises?
As more and more of a particular good is produced, which of the following rises?
Trade-offs arising from limited incomes give rise to:
Trade-offs arising from limited incomes give rise to:
Why do economists not include money as a factor of production?
Why do economists not include money as a factor of production?
Which of the following best represents the relationship between a capital good and a consumer good or service?
Which of the following best represents the relationship between a capital good and a consumer good or service?
Study Notes
Opportunity Cost and Economic Concepts
- Opportunity cost is the highest-valued alternative sacrificed when choosing between goods.
- A budget line represents combinations of goods consumers can buy based on income.
- Economics is a social science not primarily concerned with making money.
Scarcity and Rational Self-Interest
- Scarcity refers to the general condition where demand exceeds supply.
- Rational self-interest involves individuals pursuing opportunities to increase satisfaction while weighing costs and benefits.
Macroeconomics vs. Microeconomics
- Macroeconomics focuses on the economy as a whole, considering national metrics like GDP growth and trade deficits.
- Microeconomics examines individual economic units like consumers and firms, including specific pricing and employment decisions.
Economic Decision-Making
- Positive economics is based on factual, measurable statements, while normative economics involves value judgments.
- Rational economic decisions occur when individuals compare costs and benefits.
Role of Government and Economic Rights
- The government plays a substantial role in U.S. capitalism by providing goods, regulating distribution of income, promoting stability, and establishing economic rules.
- Private property rights enable individuals to exchange, innovate, and invest, contributing to economic growth.
Production and Capital Goods
- The factors of production include land, labor, capital, and entrepreneurship.
- Capital goods are used to produce consumer goods, indirectly satisfying consumer wants.
Production Possibilities Model
- The production possibilities curve illustrates the maximum output that can be achieved with available resources.
- Points on the curve indicate efficiency, while points inside reflect inefficiency.
- An outward shift in the production possibilities curve can occur due to improved resources or techniques.
Specialization and Trade-offs
- Specialization involves focusing resources on producing a limited range of goods.
- Trade-offs illustrate the relationship between choices and opportunity costs, where giving up one good incurs the cost of a forgone alternative.
Economic Resources and Investment
- Economic resources are considered scarce, and their allocation comes with costs for society.
- Investment is defined as spending that helps in the production and accumulation of capital goods necessary for economic growth.
Marginal Analysis
- Marginal change refers to incremental adjustments in economic decision-making.
- Decisions are rational when the expected marginal benefit equals or exceeds the marginal cost.
Ceteris Paribus Principle
- The ceteris paribus assumption holds that all relevant factors apart from those being analyzed remain constant.
Importance of Economic Analysis
- Analyzing the interplay of various economic factors, including employment and international trade, is crucial for understanding macroeconomic stability.
- Identifying production possibilities enables assessment of resource efficiency within an economy.
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Description
Test your understanding of key concepts from Economics Chapter 1 with these flashcards. Topics include opportunity cost and budget lines, essential for grasping the fundamentals of economic decision-making. Perfect for students looking to reinforce their knowledge!
