CH.1-4

Question 1

The study of how people manage scarce resources

Answer 1

economics

Question 2

study of how individuals and firms manage resources

Answer 2

microeconomics

Question 3

study of the economy as a whole

Answer 3

macroeconomics

Question 4

how policy makers manage growth/ behavior of the overall economy

Answer 4

macroeconomics

Question 5

people make choices to achieve their goals in the most effective way with the resources they have

Answer 5

rational behavior

Question 6

wanting more than we can get with available resources

Answer 6

scarcity

Question 7

the true cost of your choices

Answer 7

opportunity cost

Question 8

the value you could have gained by choosing your next best alternative

Answer 8

opportunity cost

Question 9

a cost that has already been incurred and can’t be recovered

Answer 9

sunk costs

Question 10

not only maximizing productivity but also ensuring that people get what they most want and need given the available resources

Answer 10

efficiency

Question 11

consistent relationship

Answer 11

correlation

Question 12

one variable causes another

Answer 12

causation

Question 13

balance objective data with personal values and career aspirations

Answer 13

positive/ normative analysis

Question 14

helps us understand how our activities interact and impact the broader economy

Answer 14

circular flow diagram

Question 15

what are the assumptions of the PPF

Answer 15

only 2 choices are possible, fixed number of resources, fixed technology, full and efficient use of resources

Question 16

what affects productivity

Answer 16

a shifting or reallocation of resources

Question 17

point outside the graph is _______

Answer 17

unattainable

Question 18

point inside the graph is ________

Answer 18

efficient

Question 19

what is absolute advantage

Answer 19

being more productive than another

Question 20

what is comparative advantage

Answer 20

if a person can perform an activity at a lower opportunity cost than another person

Question 21

what is a market

Answer 21

buyers and sellers who trade a particular good or service

Question 22

what is quantity demand

Answer 22

the amount of a good or service buyers are willing and able to purchase at a given price

Question 23

what is the law of demand

Answer 23

the lower the price, the higher the quantity demanded (all things equal)

Question 24

what is the demand schedule

Answer 24

shows the inverse relationship between price and amount purchased at each price

Question 25

what axis is price on

Answer 25

vertical

Question 26

what axis is quantity on

Answer 26

horizontal

Question 27

what is change in quantity demanded

Answer 27

movement along the demand curve, only caused by a change in the price of a good

Question 28

what are the demand shifters

Answer 28

consumer preferences, number of buyers, income, expectations, and prices of related goods

Question 29

what happens when there is a change in any of the demand shifters

Answer 29

it will shift the entire demand curve

Question 30

what are substitutes

Answer 30

2 goods a consumer might purchase in place of another

Question 31

what are complements

Answer 31

goods that are purchased together

Question 32

a decrease in supply will shift the graph _______

Answer 32

left

Question 33

a increase in supply will shift the graph _______

Answer 33

right

Question 34

what is equilibrium

Answer 34

where the supply curve and the demand curve intersect

Question 35

what is the point of equilibrium

Answer 35

at this point consumers are willing to buy exactly what products are willing to sell

Question 36

what is elasticity

Answer 36

measure of the responsiveness to a change in market condition

Question 37

what is the price of elasticity demand

Answer 37

measures the magnitude of change in the quantity demanded from a change in price

Question 38

what is the price of elasticity demand

Answer 38

describes the size in change in the quantity demanded of a good when its price changes

Question 39

what is elastic

Answer 39

greater than 1% change in quantity demanded

Question 40

what is inelastic

Answer 40

< 1% change in quantity demanded

Question 41

what is unit elastic

Answer 41

equal % change in quantity demanded

Question 42

what does a perfectly elastic graph look like

Answer 42

completely flat (horizontal)

Question 43

what does a completely inelastic graph look like

Answer 43

completely vertical

Question 44

what are the determinants of elasticity

Answer 44

availability of substitutes, degree of necessity, cost of relative income, adjustment time, and scope of the market

Question 45

what is total revenue

Answer 45

the amount that a firm recieves from the sale of goods/ services

Question 46

what is the total revenue formula

Answer 46

TR= P x Q

Question 47

increases in available resources _______ the entire frontier _______

Answer 47

shifts, outward

Question 48

improvement in technology for one good ________ the frontier ________

Answer 48

rotates, outward