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Econ > Review > Flashcards

Review Flashcards

1
Q

In economics, resources are _____

A

Things used to produce items of value

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2
Q

Wants are ____

A

What people would buy if their incomes were unlimited

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3
Q

In economics, all the items that people would consume if they had unlimited income are known as ____

A

Wants

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4
Q

The 3 fundamental economic questions that a nation addresses in order to allocate society’s scarce resources are:
1.
2.
3.

A
  • How to produce the item?
  • What and how much will be produced?
  • Whom will the items be produced?
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5
Q

The notion that people don’t intentionally make decisions that would leave them worse off is known as _____

A

The rationality assumption

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6
Q

The hypothesis that people are nearly, but not fully, rational, so that they can’t examine every possible choice available to them but instead use simple rules of thumb to sort among the alternatives that happen to occur to them is known as _____

A

Bounded rationality

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7
Q

The assumption of bounded rationality suggests that people might use rules of thumb to guide their decision making because ____

A

People can’t examine every possible choice available to them

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8
Q

Which of the following is not true about economic models?
A) a good model must be realistic
B) in comparing two models, the simpler one is better, other things equal
C) models are used to explain and predict human behavior
D) a model is a simplified representation of the real world

A

A) a good model must be realistic

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9
Q

Based on the recommendation of a friend, you buy a ticket and attend a movie with high expectations. After seeing the movie, you think that it is the worst film ever made and that it was a complete waste of money. This situation
A) is consistent with rational behavior because you had thought that you were going to like the movie
B) demonstrate that the rationality assumption is false because you were worse off for seeing the movie
C) demonstrates that you behaved irrationally because you didn’t get enough information prior to attending the movie

A

A) is consistent with rational behavior because you had thought that you were going to like the movie

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10
Q

Economics is ____

A

The study of how limited resources are allocated to satisfy unlimited wants

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11
Q

The ceteris paribus assumption means ____

A

Other things equal

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12
Q

The most basic concept in economics is ____

A

Scarcity

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13
Q

Scarcity exists ____

A

In all human societies

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14
Q

Economic models can be used to _____

A

Explain or predict economic phenomena

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15
Q

Scarcity implies that ____

A

People must make choices

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17
Q

Opportunity cost exists because ____

A

Of scarcity

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19
Q

Scarcity is a situation in which _____

A

The resources required to produce the goods and services that people desire are insufficient to satisfy all wants

20
Q

Wants is the term used by economists instead of needs because _____

A

Needs aren’t objectively definable

The term need is subjective making it difficult to distinguish between something someone wants and something they need

22
Q

The production possibilities curve represents _____

A

All possible combinations of total output that can be produced

23
Q

An improvement in technology will shift the production possibilities curve ____

A

Outward

24
Q

If a country increased the production of its capital goods, then the ____ consumption we can have _____ but we will have _______

A

Less
Today
More in the future

25
Q

The opportunity cost of more consumption of goods today is _____

A

Lower consumption of goods in the future

26
Q

Which is a best example of specialization
A) a firm that produces both luggage and cooking oil
B) a high school math teacher who teaches only calculus
C) a high school math teacher who teaches algebra and calculus
D) a person whose job includes accounting, personnel and maintenance tasks

A

B) a high school math teacher who teaches only calculus

27
Q

Why specialization?

A

It usually increases productivity

28
Q

Absolute advantage is

A

Producing a good using the fewest inputs

29
Q

A person has comparative advantage in an activity whenever she can

A

Perform the activity at a lower opportunity cost than another person can

30
Q

A demand curve represents a(n)

A

Indirect or inverse relationship between price and quantity demanded

31
Q

By summing up the quantities demanded by individuals at each price we obtain the ____

A

Market demand curve

32
Q

Human beings have _____

A

Unlimited wants

33
Q

Extremely cold winter weather has destroyed oranges in Florida. The freeze has caused
A) a shortage because people can’t obtain as many oranges as they wish to buy at the pre-freeze price
B) scarcity because there are less oranges now than people want
C) a shortage because the orange growers will have less income
D) scarcity because people will have to switch to other types of citrus fruits

A

A) a shortage because people can’t obtain as many oranges as they wish to buy at the pre-freeze price

34
Q

Opportunity cost is ____

A

The value of the next best alternative which was given up

Is always the value of the next best forgone opportunity

36
Q

Human capital is the _______

A

Accumulation of skills, training and education of workers

37
Q 
Which of the following is not a determinant of demand?
A) consumers' tastes
B) prices of other goods
C) production of technology
D) consumer's income
A

C) production of technology

38
Q

According to the law of supply, producers ______

A

Provide less of a good when the price decreases

39
Q

Change in _____ causes a movement along a supply curve?

A

Change in price

40
Q

Which of the following represents the law of supply?
A) an increase in the price of a good causes a rightward shift of the supply curve for that good
B) an increase in the price of a good causes an increase in the quantity supplied of that good
C) an increase in the price of a good causes an increase in the supply of that good

A

B) an increase in the price of a good causes an increase in the quantity supplied of that good

41
Q

If the price in cotton used to make blue jeans increases, the supply curve for jeans will ____

A

Shift inward (leftward)

42
Q

What will cause an outward (rightward) shift in the supply curve?

A

Technological progress

43
Q

In a price system, changes in price signal to everyone what goods are _____

A

Relatively more or less scarce

44
Q 
Ways to ration goods are
A) prices
B) first come first served
C) political power
D) all of the above
A

D) all of the above

Econ (3 decks)

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