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Econ 101 Midterm > Econ Midterm #1 > Flashcards

Econ Midterm #1 Flashcards

1
Q

Scarcity

A

the condition that arises bc wants exceeds the ability of resources to satisfy them (we must choose among available alternatives)

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2
Q

Economics

A

is the social science that studies the choices that individuals, businesses, and governments make as they cope with scarcity, the incentives that influence those choices, and the arrangement that coordinate them.

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3
Q

Microeconomics

A

the study of the choices that individuals and businesses make and the way these choices interact and are influenced by governments.

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4
Q

Macroeconomics

A

the study of the total effects on the national economy and the global economy of the choices that individuals, businesses, and governments make.

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5
Q

Economic ?’s

A
  • How do choices determine what, how, and for whom goods and services get produced?
  • When do choices made in self-interest also promote the social interest?
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6
Q

goods and services

A

are objects and actions that people value and product to satisfy human wants

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7
Q

what

A

goods and services get produced and in what quantities

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8
Q

How

A

goods and services get produced and in what quantities

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9
Q

For whom

A

are the various goods and services produced (this depends on the income that people earn and the prices they pay for goods and services)

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10
Q

Self interest

A

choices that are best for the individual who makes them

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11
Q

social interest

A

the choices that are best for a society as a whole

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12
Q

trade off

A

an exchange (giving up something for something else)

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13
Q

Opportunity cost

A

is the best thing that you must give up to get something – the highest valued alternative forgone (example: professor gives up spending time with family in order to teach)

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14
Q

marginal cost

A

is what you must give up to get one additional unit of it

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15
Q

Marginal benefit

A

is the what you gain when you get one more unit of something (is measured by what you are willing to give up to get one additional unit of it)

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16
Q

normative statements

A

disagreements that cant be settled by facts

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17
Q

positive statements

A

disagreements that can be settled by facts

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18
Q

cross section graph

A

shows value of an economic variable for different groups in a population at a point in time
Ex: a graph that shows SAT scores of male and female students in 2012 is a cross section graph

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19
Q

ceteris paribus

A

“other things remaining the same”- this assumption is used when graphing a relationship that involves more than two variables

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20
Q

production possibilities frontier

A

boundary between the combination of goods and services that can be produced and the combinations that cannot be produced given the available factors of productions and the state of technology

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21
Q

production efficiency

A

a situation in which we cannot produce more of one good or service without producing less or something else

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22
Q

free lunch

A
  • a gift or getting something without giving up something else
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23
Q

On a PPF there are 500 lb apple and 1200 lb bananas and at another point there is 300 lb and 1300 lb bananas the opportunity cost of producing bananas is

A

200 apples/ 100 bananas = 2 lb apples

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24
Q

economic growth

A

sustained expansion of production possibilities (when an economy’s resources increase, its production possibilities expand and its PFF shifts outward)

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25
absolute advantage
when a nation is more productive than another (needs fewer inputs or takes less time to produce a good or perform a production task. Nations gain from specializing in production of the goods in which they have a comparative advantage and then trading.
26
comparative advantage
is the ability of a person to perform an activity or produce a good or service at a lower opportunity cost than someone else.
27
If the PFF between two goods were a straight line (the resources are equally productive and then the OC of one good in terms of another would be
constant
28
In a PPF the cost of producing more units of a good is measured by
the amount of the other good or service that must be forgone
29
The concave shape of the production possibilities curve implies that as production of one good increases, society must forgo
increasing amounts of another good
30
* To increase economic growth a nation should encourage education because
it increases quality of labor
31
In the production possibilities frontier model, an unattainable point lies
outside the PPF
32
Gasoline prices increase by 50% and other things remain the same. The quantity demanded
decreases
33
An advertising company puts out successful advertising campaign that makes most people want to buy milk… as a result the demand for milk
increases
34
Markets
any arrangement that brings buyers and sellers together
35
competitive markets
has so many buyers and so many sellers that no individual buyer or seller can influence the price
36
Quantity demanded
the amount of a good, service, or resource that people are willing and able to buy during a specified period at a specified price
37
law of demand
if the price of a good rises, the quantity demanded of that good decreases If the price of the good falls, the quantity demanded of the good increases
38
demand
the sum of the demands of all buyers in a market, the market demand curve is the horizontal sum of the demand curves of all buyer in the market
39
Market Demand
the sum of the demands of all buyers in a market, the market demand curve is the horizontal sum of the demand curves of all buyer in the market
40
substitute
a good that can be consumed in place of another good (the demand for a good increases if the price of one substitute rises, the demand for a good decreases if the price of one substitute falls)
41
complement
a good consumed with another good, the demand for a good increases if the price of one of its complements falls, the demand for a good decreases if the price of one of its complements rises
42
rise of expected future price
Increases the current demand for the good
43
normal good
a good for which the demand increases if the income increases and the demand decrease if income decreases.
44
inferior good
a good for which the demand decreases if income increases and the demand increases if income decreases
45
Preferences
when preferences change the demand for one item increase and the demands for another item decreases (The preferences change when people become better informed and new goods become available)
46
quantity supplied
amount of a good, service or resource that people are willing and able to sell during a specified period at a specified price
47
law of supply
if the price of a good rises, the quantity supplied of that good increases. if the price of the good falls, the quantity supplied of that good decreases
48
supply
the relationship between the quantity supplied of a good and the price of the good when all other influences on selling plans remain the same
49
An increase in productivity
lowers the cost and increases supply
50
market equilibrium
occurs when the quantity demanded equals the quantity supplied (the buyer and sellers plan are consistent)
51
equilibrium price
the price at which the quantity demanded equals the quantity supplied
52
Equilibrium quantity
the quantity bought and sold at the equilibrium price.
53
shortage- occurs when the quantity demanded exceeds the quantity supplied (causes price to rise)
54
Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result, the equilibrium price_____, and the equilibrium quantity ______
(rises, increases)
55
When the demand curve shifts rightward and the market moves to a new equilibrium, then the ________
quantity supplied increases
55
If the supply of solar panels increases _________
the price goes down and the quantity increases
56
The equilibrium price of movie tickets is 10$. If the supply curve for the movies shifts _______, the equilibrium price will ______
(rightward, decrease)
57
surplus
occurs when the quantity supplied exceeds the quantity demanded (causes price to fall
58
when demand changes...
the supply curve does NOT shift, change in quantity supplied, equilibrium price and quantity change in same direction as demand
59
when supply changes...
the demand curve does NOT shift, changed in quantity demanded, equilibrium price changes in opposite direction as supply, equilibrium quantity changes in same direction as supply

Econ 101 Midterm (1 decks)

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