Microeconomy U1 Flashcards
(29 cards)
Sunk cost will affect the current decision
a. True
b. False
b. False
p.33
sunk costs, which are costs that were incurred in the
past and cannot be recovered, should not affect the current decision
The invisible hand is Adam Smith’s concept that individuals’ self-interested behavior can lead to positive social outcomes.
a. True
b. False
a. True
p. 40?
What is another name for underground economies? Select one: a. Black Markets b. Microeconomics c. Command economy
a. Black Markets
p.20
The government heavily regulates decisions of what to produce and prices to charge. Heavily regulated economies often have underground economies (or black markets), which are markets where the buyers and sellers make transactions without the government’s approval.
Opportunity cost is costs that we make in the past that we cannot recover.
Select one:
a. True
b. False
b. False
p. 42
- sunk costs: costs that we make in the past that we cannot recover
- opportunity cost: measures cost by what we give up/forfeit in exchange; opportunity cost measures the value of the forgone alternative
Which diagram views the economy as consisting of households and firms interacting in a goods and services market and a labor market?
Select one:
a.
Production possibilities frontier (PPF)
b.
Circular flow diagram
c.
Demand and supply diagram
b. Circular flow diagram
p.16
circular flow diagram consisting of two groups— households and firms—that interact in two markets: the goods and services market in which firms sell and households buy and the labor market in which households sell labor to business firms or other employees.
What is utility?
Select one:
a.
when a country can produce a good at a lower cost in terms of other goods; or, when a country has a lower opportunity cost of production
b.
gas, electricity and water bills
c.
satisfaction, usefulness, or value one obtains from consuming goods and services
c.
satisfaction, usefulness, or value one obtains from consuming goods and services
p.32
People desire goods and services for the satisfaction or utility those goods and services provide.
What is economics?
Select one:
a.
The branch of economics that focuses on actions of particular agents within the economy, like households, workers, and business firms.
b.
The study of how humans make choices under conditions of scarcity.
c.
A market in which firms are sellers of what they produce and households are buyers.
b.
The study of how humans make choices under conditions of scarcity.
The economies of scale mean that for many goods, as the level of production increases, the average cost of producing each individual unit declines.
Select one:
a.
True
b.
False
a.
True
p.13
economies of scale, which means that for many goods, as the level of production increases, the average cost of producing each individual unit declines
Sunk cost is costs that we make in the past that we cannot recover.
a.
True
b.
False
a.
True
p.33
sunk costs, which are costs that were incurred in the
past and cannot be recovered, should not affect the current decision
Allocative efficiency is when the mix of goods produced represents the mix that society most desires.
Select one:
a.
True
b.
False
a.
True
p.36
Allocative efficiency means that the particular combination of goods and services on the production possibility curve hat a society produces represents the combination that society most desires
As we consume more of a good or service, the utility we get from additional units of the good or service tends to become smaller than what we received from earlier units is .
Select one:
a.
Law of diminishing returns
b.
Law of diminishing marginal utility
c.
Production possibilities frontier (PPF)
b.
Law of diminishing marginal utility
p.32
law of diminishing marginal utility, which means that as a
person receives more of a good, the additional (or marginal) utility from each additional unit of the good declines. In other words, the first slice of pizza brings more satisfaction than the sixth
In a market economy, decision-making is decentralized and is based on a private enterprise .
Select one:
a.
True
b.
False
a.
True
p.19
In a market economy, decision-making is decentralized. Market economies are based on private enterprise
Gross domestic product (GDP) measures the size of total production in an economy.
Select one:
a.
True
b.
False
a.
True
p.21
Gross domestic product (GDP) measures the size of total production in an economy.
The purpose of an economy is to take a complex, real-world issue and simplify it down to its essentials.
Select one:
a.
True
b.
False
b.
False
p.16
The purpose of a theory is to take a complex, real-world issue and simplify it down to its essentials
Which economists pointed out that economics is not just a subject area but also a way of thinking?
Select one:
a.
Esther Duflo
b.
John Maynard Keynes
c.
Paul Samuelson
b.
John Maynard Keynes
p.16
John Maynard Keynes (1883–1946), one of the greatest economists of the twentieth century, pointed out that economics is not just a subject area but also a way of thinking
When a country can produce a good at a lower cost in terms of other goods; or, when a country has a lower opportunity cost of production is.
Select one:
a.
Absolute advantage
b.
Comparative advantage
c.
Economic advantage
b.
Comparative advantage
p.37
When a country can produce a good at a lower opportunity cost than another country, we say that this country has a comparative advantage in that good
A______is an institution that brings together buyers and sellers of goods or services, who may be either individuals or businesses.
Select one:
a.
Imports
b.
Exports
c.
Market
c.
Market
p.19
A market is an institution that brings together buyers and sellers of goods or services, who may be either individuals or businesses
Which term describes the world how it should be?
Select one:
a.
Positive statement
b.
Marginal analysis
c.
Normative statement
c.
Normative statement
p.39
positive statements, which describe the world as it is, and normative statements, which describe how the world should be
Which is the oldest economic system and is used in parts of Asia, Africa, and South America?
Select one:
a.
Command economy
b.
Traditional economy
c.
Market economy
b.
Traditional economy
p.18
traditional economy, which is the oldest economic system and is used in parts of Asia, Africa, and South America
The slope of the production possibilities frontier shows the opportunity cost.
Select one:
a.
True
b.
False
a.
True
p.34
with Alphonso’s budget constraint, the slope of the production possibilities frontier shows the opportunity cost
Allocative efficiency is when it is impossible to produce more of one good (or service) without decreasing the quantity produced of another good (or service).
Select one:
a.
True
b.
False
b.
False
p.36:
- Productive efficiency means that, given the available inputs and technology, it is impossible to produce more of one good without decreasing the quantity that is produced of another good
- Allocative efficiency means that the particular combination of goods and services on the production possibility curve that a society produces represents the combination that society most desires
The branch of economics that focuses on broad issues such as growth, unemployment, inflation, and trade balance is .
Select one:
a.
Macroeconomics
b.
Microeconomics
c.
Economics
a.
Macroeconomics
Which term is the goods and services that one produces domestically and sells abroad?
Select one:
a.
Imports
b.
Exports
c.
Globalization
b.
Exports
What is the trend in which buying and selling in markets have increasingly crossed national borders?
Select one:
a.
Globalization
b.
Macroeconomics
c.
Microeconomics
a.
Globalization
p.21
is the increased buying and selling of goods, services, and assets across national borders—in other words, international trade and financial capital flows
