MicroEco Chapter 1 Flashcards

Questions and Answers

What do opportunity costs exist because of?

The decision to engage in one activity means forgoing some other activity.

What is microeconomics concerned with?

A detailed examination of specific economic units that make up the economic system.

The price of personal computers declined 4.7 percent last year is a microeconomic statement.

True

What is the economizing problem?

The need to make choices because economic wants exceed economic means. Signup and view all the answers

What shows the alternative combinations of two goods a consumer can purchase with a specific money income?

A budget line Signup and view all the answers

What are the four factors of production?

Land, labor, capital, and entrepreneurial ability. Signup and view all the answers

What is the process of producing and accumulating capital goods called?

Investment Signup and view all the answers

What does the production possibilities curve illustrate?

If all the resources of an economy are in use, more of one good can be produced only if less of another good is produced. Signup and view all the answers

The reduction of unemployment will not produce an outward shift of the production possibilities curve.

True Signup and view all the answers

Why is a nation's production possibilities curve bowed out from the origin?

Resources are not generally equally efficient in producing every good. Signup and view all the answers

What can we conclude if a change in government policy results in greater production of both consumer goods and investment goods?

The economy was not employing all of its resources before the policy change. Signup and view all the answers

What is the effect of resolving unemployment in an economy?

Move the level of actual output onto the economy's production possibilities curve. Signup and view all the answers

What is the basic difference between consumer goods and capital goods?

Consumer goods satisfy wants directly while capital goods satisfy wants indirectly. Signup and view all the answers

A technological advance that allows farmers to produce more output from given inputs will shift the production possibilities curve to the right.

True Signup and view all the answers

What enables a nation to obtain a combination of consumer goods and capital goods outside its production possibilities curve?

International specialization and trade. Signup and view all the answers

If all discrimination in the United States were eliminated, what would the economy do?

Produce at some point closer to its production possibilities curve. Signup and view all the answers

What best explains Japan's economic growth despite a declining population?

Advancements in technology that make labor more productive. Signup and view all the answers

Study Notes

Opportunity Costs

Opportunity costs arise when choosing one activity over another, leading to the forgoing of alternative options.

Microeconomics

Microeconomics focuses on specific economic units within the larger economic system, examining individual behaviors and decisions.

Microeconomic Statement

An example of a microeconomic statement: "The price of personal computers declined 4.7 percent last year."

Economizing Problem

The economizing problem involves making choices due to limited economic resources compared to unlimited wants.

Budget Line

A budget line represents various combinations of two goods that a consumer can purchase within a set money income.

Factors of Production

The four factors of production include land, labor, capital, and entrepreneurial ability.

Investment

Investment is the process of producing and accumulating capital goods necessary for future production.

Production Possibilities Curve

The production possibilities curve (PPC) demonstrates that to produce more of one good, an economy must reduce the production of another good if all resources are fully utilized.

Shift in PPC

A reduction in unemployment does not lead to an outward shift of the production possibilities curve since it does not increase resource availability.

Bowed-Out Shape of PPC

A nation's production possibilities curve is bowed outward because resources are not equally efficient in producing all goods.

Policy Changes and Resource Utilization

Increased production of consumer and investment goods after a policy change indicates prior underutilization of resources.

Unemployment Impact

Resolving unemployment will push actual output closer to the economy's production possibilities curve, improving efficiency.

Consumer vs. Capital Goods

Consumer goods satisfy wants directly, while capital goods indirectly satisfy wants by aiding in the production of consumer goods.

Advancements and PPC

Technological advances can shift the production possibilities curve to the right, enabling increased output from the same inputs.

International Trade

International specialization and trade allow nations to achieve combinations of consumer and capital goods outside their production possibilities curve.

Impact of Discrimination

Eliminating discrimination in the U.S. economy could lead to production closer to the production possibilities curve, enhancing overall economic output.

Japan's Economic Growth

Japan's economic growth, despite a declining population, can be attributed to advancements in technology that enhance labor productivity.

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Description

Test your understanding of key concepts from Microeconomics Chapter 1 with these flashcards. This quiz covers opportunity costs, the focus of microeconomics, and specific microeconomic statements. Perfect for students looking to reinforce their learning.