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Spring Semester > Econ 101 Exam 1 > Flashcards

Econ 101 Exam 1 Flashcards

(73 cards)

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1
Q

Define Economy

A

One who manages a household.

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2
Q

A lot of decisions are based on what 3 basic questions?

A
  1. What to produce?
  2. How to produce?
  3. For whom to produce?
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3
Q

We must ______ resources.

A

Allocate

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4
Q

Are used to produce goods and services (g + s)

A

Resources

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5
Q

What are the four types of Resources?

A

Capital
Labor
Natural Resources
Entrepreneurial Ability

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6
Q

A human creation.

A

Capital

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7
Q

What is Capital?

A

Something produced that is used to produce something else.

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8
Q

What is Physical Capital?

A

Physical goods used to make other goods.

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9
Q

What is this an example of?
Ex.- Tools, machinery, computers, etc.)

A

Physical Capital

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10
Q

What is Human Capital?

A

Skills + knowledge people gain to increase productivity.

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11
Q

What is this an example of?
Ex.- Education, training, etc.)

A

Human Capital

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12
Q

Human effort

A

Labor

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13
Q

What is Labor?

A

The TIME people spend producing g + S.

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14
Q

What is Capital Stock?

A

Physical Capital + Human Capital = Total Useful Capital

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15
Q

How do we use economics every day?

A

Prices, buying decisions, use of time, etc.

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16
Q

What is the payment form of Capital?

A

Interest

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17
Q

What is the payment form of Labor?

A

Wage

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18
Q

What are Natural Resources?

A

Nature’s creations

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19
Q

What are the two forms of Natural Resources?

A

Renewable and Nonrenewable

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20
Q

What is the payment form of Natural Resources?

A

Rent

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21
Q

What qualities fall under Entrepreneurial Ability?

A

Imagination, skills to organize, and risk

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22
Q

What is the payment form of Entrepreneurial Ability?

A

Profit

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23
Q

The most fundamental economic problem we have is that Resources are ________.

A

scarce

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24
Q

What does scarce mean?

A

Not freely available, price is higher than zero

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25
Define Economics
Science of scarcity Study of how people use their limited resources to satisfy unlimited wants.
26
What are the four types of Decision Makers?
Households Firms Governments Rest of World
27
Consumers demand _______.
g + s
28
Resource owners ______ resources.
supply
29
What two types fall under households?
Consumers and Resource Owners
30
Firms and Governments demand ________ to produce g + s.
Resources
31
What does the Rest of the World do?
Trade
32
Buyers and Sellers carry out exchanges in ________.
Markets
33
G + S are exchanged in _________.
Product Markets
34
- Determine prices + quantities - Provides mechanism to convey info about the quantity, quality, and price of g + s offered for sale.
Markets
35
Labor, Capital, etc are exchanged in ________.
Resource Markets
36
Individuals are rational.
Rational Self Interest
37
Choice requires _______
Time + Info
38
Time is ______
scarce
39
Information is _________
valuable
40
Being willing to pay for info ________
improves choices
41
Will continue to acquire info as long as ____________ is higher than additional cost.
additional benefit expected
42
Economic analysis is _________.
Marginal analysis
43
Define Marginal
additional, extra, incremental
44
Microeconomics focuses on individual ________.
Markets
45
What is!
Positive Analysis
46
What should be
Normative Analysis
47
Can be supported/ rejected based on facts/data/
Positive Analysis
48
Opinion or Value judgement that cannot be supported/rejected.
Normative Analysis
49
What is this an example of? Ex.- You should wear a seatbelt. Abortion should be illegal.
Normative Analysis
50
Define Opportunity Cost
Value of next best alternative
51
The choice to do something is at the same time the choice not to do something else.
Opportunity Cost
52
Define Sunk Costs
Has already been incurred
53
We _____ Sunk Costs when making economic decisions.
ignore
54
All production has an ____________.
Opportunity Cost
55
What is this an example of? Ex.- You purchased a $15 dollar movie ticket, but you realize during the movie that you hate it.
Sunk Cost
56
Define Efficient Production
Max possible output, given existing resources + technology
57
Define PPF
Shows all combos of 2 goods that can be produced, assuming efficient production
58
What does PPF stand for?
Production Possibilities Frontier
59
What are these assumptions of? - 2 broad classes of output - Quantity, quality of Res + Tech is fixed - Resources are specialized
PPF
60
What are Specialized resources
Some resources are better adapted to produce one good than another.
61
What do the points on the curve of a PPF mean?
No way to allocate resources to increase production of 1 good without decreasing the production of the other good.
62
What do the points inside the curve on a PPF mean?
- Waste, mismanagement of resources - Unemployed resources
63
What do the points outside of the curve mean?
Unattainable
64
The slope of a PPF is always ______.
Negative
65
Why does the line on a PPF bow out?
Law of Increasing Opportunity Cost and resources are specialized
66
Define Law of Increasing Opportunity Cost
To produce more of 1 good, increasing amounts of the other good must be given up.
67
What does a Linear PPF mean?
Constant Opportunity Cost and Resources are not specialized
68
Define Economic Growth
Increasing the productive capacity of economy
69
What causes the PPF to shift?
Economic Growth
70
- Improved Tech - More resources - Better Resources
PPF shifts out
71
More resources and better resources ______ capital stock.
increase
72
- exhaust - Lose scarce resources - War - Natural Disasters - Decrease in Natural Resources
PPF shifts in
73
What are the Economic concepts illustrating PPF
- Efficiency - Scarcity (Opp Cost & Econ Growth) - Choice

Spring Semester (32 decks)

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