Economics Chapter 1 Flashcards

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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?

Opportunity cost

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.

budget

Economics, as a social science, is concerned with how to make money.

False Signup and view all the answers

________ is the notion that, in general, the quantity desired of economic goods (or services) exceeds the quantity available.

Scarcity Signup and view all the answers

Which of the following describes the concept of rational self-interest?

Individuals weigh the costs and benefits of their decisions Signup and view all the answers

What type of economics exemplifies the trade deficit between the U.S. and China growing between 2000 and 2009?

Macroeconomics Signup and view all the answers

What type of economics is illustrated by Chase Bank lowering its interest rate on business loans?

Microeconomics Signup and view all the answers

What economic concept is represented by the real GDP growing by 2.2 percent in 2007?

Macroeconomics Signup and view all the answers

What economic event caused the price of oranges to rise due to an unexpected freeze?

Microeconomics Signup and view all the answers

What reflected an example of macroeconomics when the Consumer Price Index rose by 3 percent in 2007?

Macroeconomics Signup and view all the answers

What type of economics is shown by a U.S. software firm laying off workers and transferring work to India?

Microeconomics Signup and view all the answers

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.

False Signup and view all the answers

__________ is the discipline of economics concerned with individual units such as a person, household, firm, or industry.

Microeconomics Signup and view all the answers

What branch of economics studies the economy as a whole or in the aggregate?

Macroeconomics Signup and view all the answers

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.

what to produce Signup and view all the answers

Which of the following are all possible because of private property rights in a market system?

Economic growth Signup and view all the answers

An _______ outcome is one each individual affected is treated fairly.

Equitable Signup and view all the answers

Economics assumes that human behavior reflects '_______ self-interest.'

Rational self-interest Signup and view all the answers

When utilizing scarce resources to produce goods or services, there is a cost borne by society. What is this commonly referred to as?

No free lunch Signup and view all the answers

In economics, an incremental or gradual change is also known as a _________.

marginal change Signup and view all the answers

Which of the following define positive economics?

Statements based on facts Signup and view all the answers

Normative economics is based on what?

Subjective or value judgments Signup and view all the answers

Economics is a science concerned with the allocation of __ resources to meet the unlimited wants of the members of a given society.

social; scarce Signup and view all the answers

Consumers derive personal satisfaction from goods and services by which of the following methods?

Allocating their time, energy, money, and other resources to maximize satisfaction Signup and view all the answers

What is the economic decision-making process considered rational when individuals do?

Compare benefits and costs Signup and view all the answers

_______ economics focuses on facts and cause and effect relationships.

Positive Signup and view all the answers

In macroeconomics, an ________ is a collection of specific economic units treated as if they were one unit.

aggregate Signup and view all the answers

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.

contracts Signup and view all the answers

_ economic analysis concerns what is, whereas _____ economic analysis represents subjective statements about what ought to be.

Positive Signup and view all the answers

Which of the following describes the role of government in the United States' form of capitalism?

Modifies the distribution of income Signup and view all the answers

When consumers purchase a good or service, they do so in order to _______ their level of utility or well-being.

increase Signup and view all the answers

A consumer will purchase a good or service when the marginal benefit is greater than or equal to what?

Marginal cost Signup and view all the answers

The economic perspective focuses on _________; therefore, the decision-maker must compare incremental benefits and costs.

Marginal analysis Signup and view all the answers

Private property helps to facilitate exchange in which type of economic system?

Free market system Signup and view all the answers

Which of the following economic measures are considered in macroeconomic analysis?

National income Signup and view all the answers

Property rights encourage which of the following?

Investment Signup and view all the answers

Positive economics encourages value judgments.

False Signup and view all the answers

Which of the following best clarifies the 'other-things-equal' assumption?

All variables except those under immediate consideration are held constant for a particular analysis Signup and view all the answers

Which of the following are issues most explored in microeconomics?

A firm's decision to hire more workers Signup and view all the answers

Which of the following statements or questions represent positive economics?

The unemployment rate in Mexico is higher than in the U.S. Signup and view all the answers

When individuals take into account the costs and benefits of their economic decisions, these decisions are considered to be __________.

rational Signup and view all the answers

Which of the following statements or questions represent normative economics?

The government should increase the minimum wage Signup and view all the answers

Positive economics is concerned with _, whereas normative economics deals with __.

What is Signup and view all the answers

Which of the following define ceteris paribus?

The idea that factors other than those being considered in a particular analysis do not change Signup and view all the answers

In the type of capitalism practiced in the U.S. and most other countries, the government plays __________ role.

a substantial Signup and view all the answers

In economics, the term __________ describes spending that pays for the production and accumulation of capital goods.

investment Signup and view all the answers

The factors of production include which of the following?

Entrepreneurship Signup and view all the answers

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.

Labor Signup and view all the answers

The situation where one thing has to be given up in order to have some other item is called a:

A trade-off Signup and view all the answers

Factories, storage, transportation and distribution facilities, as well as tools and machinery are all examples of physical ____________ goods.

capital Signup and view all the answers

From an economic standpoint, _______ includes all natural resources used in the production process.

land Signup and view all the answers

Combinations of goods that fall on the production possibilities curve are:

Represent economic growth Signup and view all the answers

What does a production possibilities curve (frontier) show?

The attainable combination of two goods that can be produced given a specific set of resources. Signup and view all the answers

Capital goods differ from consumer goods in that:

Capital goods satisfy consumer wants indirectly through the production of consumer goods Signup and view all the answers

Arable land, water machinery, and professional baseball players are all considered scarce economic __________ to production.

inputs Signup and view all the answers

Combinations of output that fall inside the production possibilities curve represent:

Less total output in an economy Signup and view all the answers

Select all choices from the following that would be considered land to an economist.

Water Signup and view all the answers

Points lying _______ the production possibilities curve (frontier) would represent a greater but unachievable level of output than that at any point on the curve.

outside Signup and view all the answers

Constant opportunity cost is best represented by:

The straight-line production possibilities Signup and view all the answers

As individuals' incomes rise, they will still be confronted with which of the following?

Trade-offs Signup and view all the answers

Points _______ the production possibilities curve are attainable so long as an economy uses all of its available resources.

Along Signup and view all the answers

A nation's production possibilities curve (frontier) can shift outward due to:

Specialization and trade Signup and view all the answers

In economics, investment describes spending:

That pays for the production and accumulation of capital goods Signup and view all the answers

What does each point on a production possibility represent?

Efficiency in production Signup and view all the answers

Points lying _______ the production possibilities curve (frontier) are unattainable with the current availability of resources and technology.

outside Signup and view all the answers

Which of the following best describes the relationship between trade-offs and opportunity costs?

As you give up consumption or production of one good over another, an opportunity cost is incurred Signup and view all the answers

The importance of the production possibilities model is to show the different combinations of goods and services that society can produce:

Given a fixed amount of resources Signup and view all the answers

What is specialization in economics?

About an individual or firm using available resources to produce one or only a few goods and services. Signup and view all the answers

What drives the law of increasing opportunity costs?

Resources that are not equally productive in the production of different goods or interchangeable. Signup and view all the answers

As more and more of a particular good is produced, which of the following rises?

Opportunity costs Signup and view all the answers

Trade-offs arising from limited incomes give rise to:

Opportunity costs Signup and view all the answers

Why do economists not include money as a factor of production?

Money is a medium of exchange rather than an input to the production of goods and services. Signup and view all the answers

Which of the following best represents the relationship between a capital good and a consumer good or service?

A commercial baking oven and loaves of bread Signup and view all the answers

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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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!

Economics Chapter 1 Flashcards

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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 combinations are attainable given a consumer's budget line?

A consumer's ___________ line or constraint shows various combinations of two products that can be purchased with a specific amount of income.

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.

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 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 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 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.

__________ 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?

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?

An _______ outcome is one each individual affected is treated fairly.

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?

In economics, an incremental or gradual change is also known as a _________.

Which of the following define positive economics?

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.

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?

_______ 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.

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.

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.

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.

Private property helps to facilitate exchange in which type of economic system?

Which of the following economic measures are considered in macroeconomic analysis?

Property rights encourage which of the following?

Positive economics encourages value judgments.

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 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 __________.

Which of the following statements or questions represent normative economics?

Positive economics is concerned with _________, whereas normative economics deals with __________.

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 economics, the term __________ describes spending that pays for the production and accumulation of capital goods.

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.

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.

From an economic standpoint, _______ includes all natural resources used in the production process.

Combinations of goods that fall on the production possibilities curve are:

What does a production possibilities curve (frontier) show?

Capital goods differ from consumer goods in that:

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:

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.

Constant opportunity cost is best represented by:

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.

A nation's production possibilities curve (frontier) can shift outward due to:

In economics, investment describes spending:

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.

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:

What is specialization in economics?

What drives the law of increasing opportunity costs?

As more and more of a particular good is produced, which of the following rises?

Trade-offs arising from limited incomes give rise to:

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?

Study Notes

Opportunity Cost and Economic Concepts

Economics is a science concerned with the allocation of __ resources to meet the unlimited wants of the members of a given society.

_ economic analysis concerns what is, whereas _____ economic analysis represents subjective statements about what ought to be.

Positive economics is concerned with _, whereas normative economics deals with __.