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Flashcards in Macro Quiz 1 Deck (44):
1

In the circular flow illustration what should go on the bottom of the arrow pointing from factors market to business?

Factors of production

2

Instead of using sunk cost fallacy what decision making method should you use?

Economic decision rule

3

In the circular flow illustration what should go on top of the arrow pointing from goods market to households?

Goods and services

4

Comparative Advantage

Someone who is better suited to do the production of one good than to the production of the other good

5

How does a market economy answer the 3 key economic questions?

The market answers these questions

6

What decision method should you not use in economics?

Sunk Cost Fallacy

7

Absolute Advantage

Who can make more with the same amount of resources

8

For government where should you have arrows pointing?

Have 2 sided arrows(➡️⬅️) to and from households and business

9

If supply and demand shift in the same direction what will be unknown?

Price

10

When does supply and demand shift?

When there are two effects or if you see "and"

11

When is there no shift on the supply and demand graph?

If only price changes

12

Sunk Cost

Are costs that you already had to pay and cannot be recovered

13

How does a traditional economy answer the 3 key economic questions?

Tradition answers all three key economic questions

14

What goes at the top of the circular flow diagram illustration

Goods Market

15

At the end of the drawing of the circular flow diagram what should you do?

Have arrows going in both directions connecting the four sectors of the economy together

16

In the circular flow illustration what should go on the bottom of the arrow pointing from government to households?

Services

17

What are the 3 key economic questions?

What to produce?
How to produce it?
Who gets what?

18

What are the five things included in a circular flow diagram illustration?

Government
Goods Market
Business
Factors Market
Households

19

What goes on the right in the circular flow diagram illustration

Business

20

If supply and demand shift in opposite directions what will be unknown?

Quantity

21

In the circular flow illustration what should go on the bottom of the arrow pointing from government to business?

Services

22

In the circular flow illustration what should go on top of the arrow pointing from government to households?

Tax

23

What goes on the bottom in the circular flow diagram illustration

Factors market

24

When does a shift in supply happen?

Something that affects how much people want to produce

25

What is the return on the factor of production for land?

Rent

26

When does a shift in demand occur?

Something that affects how much people want to consume it

27

What are the 3 factors of production?

Land
Labor
Capital

28

What are the 2 returns on the factor of production for capital?

Interest
Profits

29

How does a market economy answer the first key economic question: what to produce?

Consumers ultimately dictate

30

Quota

A license that the government implements which limits entry into the market

31

What is the return on the factor of production for labor?

Wages

32

What goes in the center of the circular flow diagram illustration

Government

33

What is an example of a quota?

Taxi driver license

34

In the circular flow illustration what should go on the bottom of the arrow pointing from households to goods market?

Money

35

In the circular flow illustration what should go on top of the arrow pointing from business to factors market?

Factor Payment

36

Economic decision making rule

If marginal benefit is greater than the marginal cost we should do it

37

What goes on the left in the circular flow diagram illustration

Households

38

Sunk cost fallacy

Making decisions based on sunk costs

39

How does a command economy answer the 3 key economic questions?

The government determines the answers to these questions

40

Marginal Cost

Any new cost you will have to pay if you do something knew

41

What are quotas also known as?

Quantity restrictions

42

How does a market economy answer the 3rd key economic question: Who gets what?

Pricing system

43

How does a market economy answer the 2nd key economic question: How to produce it?

Firms choose based on maximizing their profits

44

In the circular flow illustration what should go on top of the arrow pointing from government to business?

Tax

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