Questions and Answers
What is scarcity?
Which of the following are considered factors of production?
What does 'land' refer to in economics?
All natural resources such as land, crude oil, water, air, and minerals.
Define capital in economic terms.
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Entrepreneurship involves assembling resources to produce new or improved products and technologies.
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What is economics?
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What is opportunity cost?
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What does the 'guns vs. butter' dilemma refer to?
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What does the production possibilities curve illustrate?
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Production possibilities schedules illustrate production choices in a chart or table.
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How does opportunity cost change along the production possibilities curve?
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Law of increasing opportunity cost states that we must give up ever-increasing quantities of other goods and services in order to get more of a particular _____.
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What does efficiency mean in economics?
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What does point Y represent in the context of production possibilities?
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What does point B represent in the production possibilities curve?
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What does economic growth refer to?
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What are the three core economic questions?
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What was Adam Smith's viewpoint regarding market allocative processes?
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What does the market mechanism rely on?
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What is the price signal?
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What does laissez-faire mean?
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What was Karl Marx's viewpoint on free markets?
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What was John Maynard Keynes’s viewpoint on market efficiency?
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Which group tends to favor Adam Smith's laissez-faire approach?
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What do liberals believe about government intervention?
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Define a mixed economy.
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What is market failure?
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What is government failure?
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What is macroeconomics?
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What is microeconomics?
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What does ceteris paribus mean?
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Study Notes
Key Economic Concepts
- Scarcity: Limited resources cannot satisfy all wants, necessitating choices.
- Factors of Production: Four categories include land, labor, capital, and entrepreneurship necessary for production.
- Land: Encompasses all natural resources like minerals, oil, water, and air.
- Labor: Refers to human skills and abilities essential for producing goods and services.
- Capital: Refers to tools and buildings used in the production process, including equipment and structures.
- Entrepreneurship: The ability and initiative to combine resources for new or improved products and technologies.
Fundamental Economic Principles
- Economics: The science of resource allocation to meet competing desires.
- Opportunity Cost: The value of the next best alternative that is forgone when making a choice.
- "Guns vs. Butter" Dilemma: The trade-off between military spending and civilian goods.
- Production Possibilities: Represents possible combinations of output that can be produced with available resources.
- Production Possibilities Schedule and Curve: Visual tools for illustrating production choices and potential outputs.
Production Efficiency and Opportunity Costs
- Efficiency: Achieving maximum output from given resources.
- Inefficiency: Points on a production curve that represent underutilization of resources.
- Law of Increasing Opportunity Cost: Greater sacrifices needed for each additional unit of a particular good produced.
Economic Growth
- Economic Growth: Expansion of production capabilities and increased output.
- Three Core Economic Questions: Address what to produce, how to produce, and for whom.
Theoretical Perspectives
- Adam Smith's Viewpoint: Advocated for minimal government intervention, emphasizing market signals (invisible hand) to guide production.
- Market Mechanism: Use of prices and sales to determine outputs and resource allocations.
- Laissez-faire: Economic philosophy of limited government involvement in the marketplace.
- Karl Marx's Viewpoint: Criticized wealth concentration, advocating for government ownership of production to reduce inequality.
- John Maynard Keynes' Viewpoint: Suggested government intervention when markets fail, balancing efficiency with oversight.
Economic Ideologies
- Conservatives: Generally support laissez-faire economics and minimal government intervention.
- Liberals: Advocate for government roles to improve market outcomes.
Market Dynamics
- Mixed Economy: Balances market freedom with government intervention in resource allocation.
- Market Failure: Occurs when the market does not achieve optimal outcomes.
- Government Failure: Situations where government action fails to enhance economic conditions.
Economic Studies
- Macroeconomics: Focuses on aggregate economic behavior and overall economic systems.
- Microeconomics: Analyzes individual behavior and components within the larger economy.
- Ceteris Paribus: Assumption that other variables remain constant when evaluating economic outcomes.
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Description
Test your knowledge with these flashcards covering key concepts from Chapter 1 of Microeconomics. Learn about scarcity, factors of production, and the various resources involved in economic activities. Perfect for students preparing for exams or wanting to reinforce their understanding of foundational economics terms.