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Flashcards in 1st Semester Final - Short Answer Deck (20):
1

Why do insatiability and scarcity necessitate choice?

Choices are necessary because they pull a person in opposite directions, both cannot be satisfied.

2

Explain and give an example of the following: Goods, free good, and economic good.

Good - Any physical object that a consumer can buy; items
Free Good - Gifts from God; water, air
Economic Good - Any good or service that has a value and can be sold; food, toys, haircuts.

3

What is the difference between microeconomics and macroeconomics? Give examples of each.

Microeconomics is the choices made the individual units - people

Macroeconomics is large scale economic choices - country/companies

4

What character quality is essential for the Christian to have victory over insatiability?

Contentment

5

What are the two purposes for economic models?

Instructions and predictions of future events

6

For an ecnomist, what is the primary value of a production possibilities curve?

A PPC enables the economists to see the maximum feasible amount that a business can produce with its limited resources. 

7

Name the four factors of production or the four payments businesses make in exchange for the factors of production.

Land, labor, capital, Entrepreneurship  
Rent, wages, interest, profit 

8

Why is the financial market necessary for the effective functioning of a developed society?

Financial market takes the savings of households and channels them to businesses so that the financial capital can help business firms operate effectively.

9

With what ecoonimc principle do we most often associate Ludwig Von Mises?

Free Market

10

Who identified the principle of diminishing marginal utility?

William Stanley Jevons

11

State the Law of Demand

Everything else being held constant, the lower the price charged for a good or service the greater the quantity people will demand and vice verse.

12

When an individual makes a decision at the margin, how does he determine the amount to obtain?

The individual chooses to obtain the amount at which the marginal benefit just offsets the marginal cost.

13

What four conditions may change the demand for a product?

-Change in people's incomes
-Change in price of related goods
-Change in people's tastes and preferences
-Change in people's expectations

14

What are three functions of prices?

Prices transmit info
Provide incentives
They redistribute income

15

State the Law of Supply

A law stating that the higher the price buyers are willing to pay, other things being held constant, the greater the quantity of the product a supplier will produce and vice versa

16

What occurs when the price of a product is higher than the price at which supply equal demand?

Surplus

17

What is the simplest solution to a surplus?

The producer lowers the price until the quantity demanded equals the quantity he has to supply.

18

Which way does a supply curve slope and why?

A supply curve slopes upward to the right indicating the greater the price buyers are willing to pay for the product greater quantity the firms will supply.

19

What three factors could lead to a change in supply?

Changes in technology 
Changes in production costs
Changes in prices of related goods

20

What is the difference between an economic cost and opportunity cost?

Economic cost is the value people place on a good or service and is reflecting upon its price

Opportunity Cost is the satisfaction a person gives up or the regret experience by not choosing differently