Econ- Chapter 1

Question 1

Economics is all about

Answer 1

Decision making

Question 2

Economics

Answer 2

Is the decipline that studies how efficient decisions are made.

Question 3

Efficient Decisions

Answer 3

Involve choosing the most valuable alternative.

Question 4

Theory of Revealed Preference

Answer 4

Our choices reveal our values

Question 5

Characteristics of Value

Answer 5

Situation, different for people, subsequent units of the same good have less value

Question 6

Optimal Arrangement Principle

Answer 6

The idea that we first choose the best, then the second best, and so on.

Question 7

Value of something to an individual

Answer 7

The most that individual is willing to sacrifice to obtain that something. Or, if the individual owns that something, its value is the least the individual is willing to accept in exchange for that something.

Question 8

Why do we value dollars?

Answer 8

The stuff we exchange them for

Question 9

Cost

Answer 9

The value of THE BEST alternative which is sacrificed when a decision is made.

Question 10

_____ is not the sum of all the things you could possibly do, because you cannot do all of them.

Answer 10

Cost

Question 11

Cost sometimes involves

Answer 11

Money

Question 12

Decisions have at least ___

Answer 12

Two alternatives

Question 13

No Free Lunch

Answer 13

Any decision involves cost

Question 14

Macroeconomics

Answer 14

The study of entire economies, using concepts like total output, the unemployment rate, the national debt, total investment.

Question 15

Scarcity

Answer 15

When we have more wants than our resources can satisfy.

Question 16

Marginal Value

Answer 16

The value of the individual units of that something.

Question 17

Marginal Analysis

Answer 17

We consume each unit for which the marginal value is at least as great as marginal cost.

Question 18

When a consumer purchases more of an item they are taking away from their_____

Answer 18

Least valuable use

Question 19

When a consumer sends more money the value that is sacrificed___

Answer 19

Rises

Question 20

Law of Diminishing Returns

Answer 20

As you add more workers to a production facility, eventually they become less productive because there’s no way for everyone to take part in the production process. Facilities cannot expand instantly.

Question 21

As production increases_____

Answer 21

Marginal costs rises

Question 22

Demand

Answer 22

The relationship between the possible prices of something and the quantities people are willing to buy, all things being equal.

Question 23

What do the demand curve and marginal value curve have in common?

Answer 23

They are the same.

Question 24

Demand can change when___

Answer 24

If either more or fewer people are in the market or if the individuals already in the market have higher or lower values.

Question 25

Supply can change if___

Answer 25

Firms’ costs change because either the prices of their resources change or the technology that is ECONOMICALLY EFFICIENT TO USE changes.

Question 26

What are the results for a consumer when purchasing an item?

Answer 26

The benefit of the item, but the negative effect the cost has on the consumer.

Question 27

What are the results for a producer when a consumer purchases a product?

Answer 27

This is a benefit to the producer, not a cost. Cost to a producer involves items like time and money.

Question 28

At high prices sellers then create a ____

Answer 28

Surplus

Question 29

At lower prices sellers then create a __

Answer 29

Shortage

Question 30

Equilibrium Price

Answer 30

Consumers can buy all they want, and at the same time, firms can sell all they want.

Question 31

Total Value -Total Cost =

Answer 31

Social Gain

Question 32

Marginal Social Gain

Answer 32

The social gain from an individual unit

Question 33

Total Value-Total Amount Paid=

Answer 33

Consumer’s Gain

Question 34

Total Amount Paid- Total Cost=

Answer 34

Producer’s Gain

Question 35

The Economic Problem

Answer 35

Allocating scarce resources to their best uses

Question 36

Changes in supply

Answer 36

Are shifts in the supply curve. That is, producers wish to produce more or less, EVEN IF THE PRICE DOES NOT CHANGE. They are caused by changes in the producer’s costs.

Question 37

Changes in demand

Answer 37

Are shifts in the demand curve. That is, consumers wish to buy more or less, EVEN IF THE PRICE DOES NOT CHANGE. They are caused by changes in things that influence the consumer’s willingness to purchase the product which have nothing to do the product price.