Micro Unit 1 Flashcards

(32 cards)

1
Q

Economics

A

The study of how “people” make choices

  • “People” can be consumers, business owners, etc
  • Econ is a relatively new science
  • Aka “the dismal science” nc it takes out human emotion
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2
Q

Basic principals for accounting

A
  1. People have wants, and they are unlimited
  2. The resources that satisfy our wants are limited
  3. Scarcity forces people to make choices
  4. All choices involve opportunity cost
  5. People choose rationally
  6. When choosing, people weigh the costs and benefits of alternatives and then decide ( and they respond to incentives)
  7. Choices are made at the margins
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3
Q

Opportunity cost

A

The cost of the next best alternative given up

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4
Q

Micro vs macroeconomics

A

Micro- an individual or individual business
Macro- the whole economy
Micro could be just one product (Price of cars goes up is micro)

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5
Q

Positive vs normative economics

A

Positive- actual facts

Normative- opinions, often uses the words “should”

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6
Q

Every society must answer what three questions

A
  1. What goods and services should be produced?
  2. How should these goods and services be produced
  3. Who consumes these goods and services
    - The way these are answered determines the economic systems
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7
Q

Economic system

A

The method used to produce allocate resources and distribution of goods and services within a society

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8
Q

Traditional economy

A

Trade and barter sytem

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9
Q

Socialism- Type of ownership and determinations of prices and products made

A

Public and market

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10
Q

Capitalism-Type of ownership and determinations of prices and products made

A

Private and market

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11
Q

Communism-Type of ownership and determinations of prices and products made

A

Public and command

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12
Q

Fascism-Type of ownership and determinations of prices and products made

A

Private and command

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13
Q

Mixed economy

A

Socialist and capitalism mixed

-All countries are mixed economy except North Korea

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14
Q

No specialization

A

Resources used for (EX black shoes) is just as good as brown shoes

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15
Q

Specialization

A

Resources are better used to make one thing than another

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16
Q

How do you know if the Production Possibilities curve is specialized

A

The graph is curved

-As we increase the production of a good, the opportuity cost of producing it increases (principal of increasing costs)

17
Q

Shifters of the production possibilities curve

A
  • Increase education (able to produce more of the products)
  • PPC always shifts out because tech gets better and population increases
  • If increase of one of the resources (ex increase guns =, which is on x axis), y-intercept will stay the same, x intercept will shift out
  • EX virus kills people would shift it inwards
  • Unemployment would make a point inside of the curve bc inefficent use of available resources (the workers are the resources)
  • Bc they are trading, they can consume outside of their own PPC
18
Q

Principal of comparative advantage

A

If two “people” specialize in what they are comparatively best at prodcuing and then trade with each other, they will consume more than they would if they did not trade
-You specialize in producing one product

19
Q

Absolute advantage

A

Ability to produce something using fewer resources than another producer

20
Q

Comparative advantage

A

Cost to produce a good at a lower opportunity cost than another producers

21
Q

Utility

A

Amount of satisfaction consumer gets from buying a product

22
Q

Marginal utility

A

Largest amount of money a consumer is willing to spend for a bundle of goods

23
Q

Total utility

A

Largest sum of money a consumer is willing to spend for a bundle of goods

24
Q

What is one of the 4 principals of individual choice
A. Resources are usually renewable
B. The real cost of something is impossible to measure
C. People take advantage of opportunities to make themselves better off only if there is no risk involved
D. Resources are scarce
E. The government redistributes income through progressive taxation

25
IF a country removes a tariff on imported shoes, we expect the domestic price of shoes to_____ and the quantity of shoes consumed in the domestic market to ___
Rise; fall
26
Which of the following statemens would be part of a macroeconomics I. The central bank has lowered interest rates to lesson the impact of a recession II. A severe drought in the American Midwest has reduced the corn harvest and increased corn prices III the U.S. Gross Domestic product has risen sharply, indicating that the recession might be near an end
I and II only
27
Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is
Whatever she would have earned if she had not been in college and whatever she would have purchased with the $10,000
28
Which of the following principals underline the economics of individual choices? A. There are gains from trade B. Market move toward equilibrium C. People usually exploit opportunities to make themselves better off D. Resources should be used as efficently as possible to achieve society's goal E. One person's spending is another person's income
C
29
Which of the following statements is a normative statement A. The women's labor force participation rate has increased during the past 100 years B. The federal minimum wage is higher today than it was in 1900 C. Children in the United States is required to go to school until they reach a certain age D. The best way to encourage growth in the economy is through government spending E. A higher demand for ethanol will likely cause a higher price of corn
D
30
The current rate of employment of 5% is too high. This is a ____ statement
Nominal
31
The tradeoff between equity and efficency occurs because
Allowcating resources fairly may cause inefficency
32
If an economy is efficent, this means
All opportunities to make people better off without making other peopel worse off have been taken