KEY CONCEPTS

Question 1

Microeconomics

Answer 1

study of choices that individuals and businesses make, the way these choices interact in the markets and the influence of governments

Question 2

Production Efficiency

Answer 2

Any point on the PPF

Question 3

Allocative Efficiency

Answer 3

point on PPF where goods and services are produced at the lowest possible cost and provide greatest benefit

Question 4

Comparative Advantage

Answer 4

1 person can perform a task at a lower opportunity costs

Question 5

2 Big Questions of Economics

Answer 5

-What, How and for Whom goods and services are produced
-Do choices made in self-interest promote social interest

Question 6

5 Key Ideas

Answer 6

1) A choice is a TRADEOFF
2) People make rational choices by COMPARING COSTS AND BENEFITS
3) Cost is what you must GIVE UP to get something
4)Most choices are HOW MUCH choices made at the margin
5) Choices respond to INCENTIVES

Question 7

Economists as Social Scientists:

Answer 7

seek to understand how world works
-Normative Statements: preferences and values: cannot be measured
-Positive Statements: can be tested

Question 8

Economists as Policy Advisors

Answer 8

Advise Governments
Tools for evaluating alternate solutions: Marginal Cost vs Marginal Benefit
Making best use of resources

Question 9

EQUATIONS UNIT 1: Linear Slope

Answer 9

Change in Y/ Change in X (1st numbers are X axis)

Question 10

EQUATIONS: Curve Slope

Answer 10

2 points from tangent line and do Change in Y/Change in X

Question 11

EQUATION: Y Axis Intercept

Answer 11

y=a+bx
a is intercept
b is slope
Becomes: a=y-bx
use a point from graph for y & x

Question 12

Factors of Production

Answer 12

Entrepreneurship: earns profit
Capital: earns interest
Land: earns rent
Labour: earns wages

Question 13

How do Economists Disentangle Cause & Effect

Answer 13

Use Natural experiments, statistical investigations, perform economic experiments

Question 14

Economists’ range of pay

Answer 14

44441-127500 Median: 85970