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Economics Exam MC
| Question | Answer |
|---|---|
| Definition of Economics | the branch of knowledge concerned with the production, consumption, and transfer of wealth. |
| What is scarcity | Limits placed on the amounts of goods and services available for consumption as a result of there being limited resources |
| What is rational self interest | A Behavioral assumption that economists make about how people act under certain economic conditions |
| If Bobby has $10 and can buy either a T Shirt or a CD. He buys the CD. The T Shirt he gave up would be his __________. | Opportunity Cost |
| A viewpoint that envisions individuals making rational economic decisions based on weighing marginal benefits and marginal costs relates to economic _________. | Perspective |
| Term for choices necessitated because society's economic wants of goods and services are unlimited but resources available are limited (Scare) | Economizing Problem |
| Comparisons of Marginal Benefits and Marginal Costs? | Marginal Analysis |
| What does a production possibilities curve show? | The different combinations of two goods or services that can be produced in a full-employment, full-production economy where the available supplies of resources and technology are fixed. |
| Why is there no such thing as a free lunch? | Scarce inputs are involved in creating free lunch including land, equipment, and farm labor. |
| What is the difference between macro and microeconomics | Macroeconomics deals with the behavior of the economy as a whole. Micro concerns with decisions made by individual customers, workers, households, and business firms |
| Analysis of facts or data to establish scientific generalizations about economic behavior | Positive Economics |
| Part of economics when economy is judged on what it should be like rather then what it currently looks like | Normative Economics |
| The assumption that factors other than those being considered are held constant. "Other things Equal" | Ceteris Paribus |
| What are the 4 factors of Economic Resources | Land, Labor, Capital, Entrepreneurial Resources |
| Goods and Services that meet consumers wants or needs directly are _______ goods. Examples include Groceries, Smartphones, Kitchen Appliances, etc. | Consumer |
| Human Made Resources used to produce goods and services that do NOT directly satisfy human wants are _______ goods. | Capital |
| Circular Flow Model Shows | Land and Labor produce goods for business who purchase and resell those goods for profit to consumers and households. |
| What does the supply curve represent | The amount of a certain good a business is willing to sell at certain price points |
| What does the demand curve represent | The quantity of a product a consumer is willing to purchase at a certain price point. |
| Determinants of Demand | PINTE: Price of Related Goods, Consumer Income, Number of Buyers, Taste, Consumer Expectation |
| Determinants of Supply | Number of Sellers, Price of other goods, Producer Expectation, Resource Prices, Technology, Taxes and Subsidies |
| Products whose demands increase as consumer incomes increase are ______. | Normal Goods |
| Products whose demands decrease as consumer incomes increase are______ | Inferior Goods |
| Explain the affect on supply demand curve shifts. | Either a supply or demand curve shift has impact on both price and quantity. For instance if Demand increases then price and quantity of a product increases. If Supply increases then Price will decrease but quantity increases |
| The price point at which both supply and demand points are equal are at the ______ point. | Equilibrium |
| Explain Price Floors and how it leads to Surplus | Price floors are minimum prices set by government. Any price of a product over the equilibrium point causes decreased demand and a surplus of a product. |
| Explain Price Ceilings and how it leads to Shortage | Price Ceilings are maximum prices set by government for a product. Any price under equilibrium point causes increased demand and a shortage of a product. |
| Difference between the maximum price a consumer is willing to pay for an additional unit of a product. | Consumer Surplus |
| The difference between the actual price a producer receives and the minimum acceptable price | Producer Surplus |
| Reductions in combined consumer and producer surplus caused by an underallocation or overallocation of resources to the production of a good or service. | Deadweight/Efficiency Loss |
| The apportionment of resources among firms and industries to obtain the production of the products most wanted by society | Allocative Efficiency |
| Automobiles, Clothes, Food, Appliances, and Video Games are all examples of what kind of goods | Private |
| National Defense, Public Schools, Public Transport, and Street Lights are all paid for by government. These are what type of good? | Public |
| Positive Externalities are an __________ of resources | Underallocation |
| Negative Externalities are an ______ of resources. | Overallocation |
| What can govt do in the case of Negative Externalities | Pigovian Tax, Direct Controls |
| What can the govt do in the case of Positive Externalities | Subsidies, Government Provision |
| The idea, first stated by economist Ronald Coase, that some externalities can be resolved through private negotiations among the affected parties. | Coase Theorem |
| If set correctly, tis tax will precisely offset the overallocation (overproduction) generated by the negative externality. | Pigovian Tax |
| The inability of potential providers of an economically desirable good or service to obtain payment from those who benefit, because of nonexcludability. | Free Rider Problem |
| The uneven distribution in wealth among American households | Income Inequality |
| Graph that shows the level of income inequality. Ratio that shows income inequality | Lorenz Curve. Gini Ratio |
| Programs created by the government that help even out income inequality. Funded usually by redistribution of wealth from higher income citizens. Some have criteria that need to be met (Age, income minimum). Examples include Welfare, Medicare, Medicaid. | Entitlement Programs. |
Created by:
NMay2