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Chapter 1 & Chapter 2 Review
Scarcity is...
How do you define "Opportunity Cost"?
Chapter 1 & Chapter 2 Review
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Chapter 1 & Chapter 2 Review
Flashcards
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Questions
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Answers
1
How do you define "Opportunity Cost"?
Cost of the best alternative given up when making a choice
How much money you spend for an opportunity
All of the alternatives that you give up
2
Scarcity is...
how people use limited resource to satisfy unlimited wants
caused by limited resource but unlimited wants
the study of the economy at the level of individuals
anything used to produce an economic good or service
3
How people use limited resources to satisfy unlimited wants
Utility
Scarcity
Economics
4
All resources are scarce
False
True
5
What does it mean to "maximize utility"?
Using the same resources for two products at the same time
Having the highest output
Getting highest level of satisfaction from using a product
6
What is the Law of Diminishing Marginal Utility?
When you break the law trying to get what you want
The more we consume, the less satisfaction will get
When the consumption of 1 more unit decreases total utility
7
An economy is defined as
sys 2 manage resources for prod, distro & consumption of G&S
the exchange of one benefit for another
what is gained by adding one more unit to an activity
something that motivates a person
8
What is physical capital?
Money to invest
Physical labor by workers
Tools, Factories, Buildings
9
What is human capital?
Money to invest in a business
Tools, factories, businesses
Knowledge & skills obtained through education & training
10
Focuses on how things ought to be
Positive Economics
Normative Economics
11
Anything used to produce an economic good or a service is a resource.
True
False
12
Marginal cost is
a system used to manage limited resources
anything used to produce an economic good or service
how people choose to use their limited resource
what is given up by adding one more unit to an activity
13
I overslept & was late for school. Coach said I couldn’t play in the game!
Costs V. Benefits
Future Consequences Count
Incentives Matter
14
Opportunity cost is every other alternative that you gave up when you made a choice.
False
True
15
What is Negative Utility?
The more we consume, the less the satisfaction
When somebody complains about your choice
When the consumption of 1 more unit decreases total utility
16
Incentives are
something that motivates a person to do something
the border or outer edge of something
how the economy actually works
17
Microeconomics is
what is gained by adding one more unit to an activity
the exchange of one benefit for a better one
an arrangement that brings buyers and sellers together
the study of the economy at the level of individuals
18
What is the definition of productivity?
Being able to multitask
Measure of the output of an economy per unit of input
Physical Labor by Workers
19
The MOST efficient use of resources is found at point
None of the above
A
D
B
20
The opportunity cost for going from making 2000 weapons to making 2750 weapons is about
90,000 pounds of food
20,000 pounds of food
10,000 pounds of food
70,000 pounds of food
21
The point labeled as "D" is
Obtainable but an inefficient use of resources
Just a dot
Efficient
Efficient but not attainable
22
Marginal benefit is
study of the economy at the level of individuals
finding out how the economy actually works
a system used to manage limited resources
what is gained by adding one more unit to an activity
23
Marginal utility is
the border or outer edge of something
people have limited resource but unlimited wants
focus is on which economic policies should be implemented
the extra satisfaction achieved from an increase of a good
24
I know that if I don’t do my chores, I won’t get my allowance this week
Scarcity Forces Tradeoffs
Incentives Matter
Future Consequences Count
25
An economic enigma is
a puzzle or riddle; explained through economic analysis
what is given up by adding one more unit to an activity
the border or outer edge of something
the branch of economics that makes value judgments
26
Positive economics is described as
finding out how the economy actually works
an arrangement that brings buyers and sellers together
something that motivates a person
a puzzle or riddle, explained through economic analysis
27
Looks at economic decision making by individuals, households and businesses
Microeconomics
Macroeconomics
28
Describes how things are today
Normative Economics
Positive Economics
29
Looks at the workings of an economy as a whole
Macroeconomics
Microeconomics
30
Scarcity goes away when the desire ends
True
False
31
I’ve studied for 3 hours for my economics quiz – should I study one more hour?
Costs v. Benefits
Incentives Matter
Thinking at the Margin
32
Macroeconomics is
an arrangement that brings buyers and sellers
extra satisfaction achieved from an increase of a good
something that motivates a person
the study of the workings of the economy as a whole
33
A resource is
what is given up by adding one more unit to an activity
because people have limited resource but unlimited wants
what is gained by adding one more unit to an activity
anything used to produce an economic good or service
34
I’ve got two hours, I can either study or take a nap
Incentives Matter
Scarcity Forces Tradeoffs
Future Consequences Count
35
Economics is defined as
exchange of 1 benefit for another that is better
when people have limited resources but unlimited wants
how people use limited resource to satisfy unlimited wants
what is given up by adding one more unit to an activity
36
Normative economics is described as
focus on which economic policies should be implemented
extra satisfaction achieved from an increase of a good
anything used to produce an economic good or service
a puzzle or riddle; explained through economic analysis
37
A shortage is permanent.
False
True
38
I’m able to go to a central location to buy good from many sellers
Costs v. Benefits
Markets Make Trade Easier
Future Consequences Count
39
A margin is
how people use limited resource to satisfy unlimited wants
the border or outer edge of something
a puzzle or riddle; explained through economic analysis
extra satisfaction from an increase of additional good
40
Before I spend $1000 on SAT prep, I decide how much it will help my score
Costs v. Benefits
Incentives Matter
Scarcity Forces Tradeoffs
41
When I need something done that I’m not great at, I am happy to pay a professional
Markets Make Trade Easier
Trade Makes People Better
Scarcity Forces Tradeoffs
42
What is financial capital?
New York City
Tools, factories & buildings
Money to invest in a business
43
The area labeled with the star is
Unattainable
Efficient but unattainable
Inefficient but attainable
The most efficient use of resources
44
A market is
the study of the workings of the economy as a whole
bringing buyers and sellers together to do business
finding out how the economy actually works
focus is on which economic policies should be implemented
45
What is the production equation?
Product, Place 7 Price
Who, what, where, when & why
Land + Labor + Capital + Entrepreneurship
Time + Money
46
What is marginal utility?
Extra satisfaction you get from 1 add'l unit
When you use all of your paper by writing in the margin
When you are forced to make a choice between two items
47
All resources have alternative uses
False
True
48
With our current resources, could we produce 80,000 pounds of food AND 3000 weapons?
Yes
No
Maybe - I need more information
49
The opportunity cost of going from 0 pounds of food to 140,000 pounds of food is
1000 weapons
140,000 pounds of food
Point D
3000 weapons
50
A tradeoff is
the study of the workings of the economy as a whole
exchanging one benefit for a better one
a system to manage limited resources
the study of the economy at the level of individuals
