Economics 1

Total Flash Cards » 62
 
1. 

economics can be best defined by

 

the social science concerned with the efficient use of scarce resources to achieve maximum satisfaction of economic wants

 
2. 

opportunity costs may be defined as the

 

the amount of one product that must be given up to produce one or more unit of another product

 
3. 

production possibilities curve shows

 

the maximum amounts of two goods that can be produced assuming the full and efficient use of available resources

 
4. 

which of the following will not produce an outward shift of the production possibilities curve?

 

the reduction of unemployment or the inefficient use of resources

 
5. 

the market mechanism can be defined as

 

the use of market prices to signal desired output

 
6. 

two kinds of markets found in the circular flow model are

 

product and factor markets

 
7. 

the gdp

 

the market value of all final goods and services produced within a nation in a specific year

 
8. 

Adam Smith wrote

 

The Wealth Of nations, which described the virtues of market based economies

 
9. 

the factors of production are

 

land labor capital and entrepreneurship

 
10. 

an economy that uses the market signals and government directives to allocate resources and coordinate economic activity is characteristic of a

 

mixed economy

 
11. 

according to the law of demand, the quantity of a good demanded in a given time period

 

decreases as its price rises

 
12. 

a change in demand means there has been a shift in the demand curve and a change in the quantity demanded

 

corresponds to a movement along the demand curve

 
13. 

a decrease in the price of one good can cause an increase in the demand for another good if the goods are

 

complements

 
14. 

a market is said to be in equilibrium when

 

the quantity demanded equals the quantity supplied

 
15. 

a shortage of a product will arise when price is

 

below equilibrium with the result that quantity demanded exceeds quantity supplied

 
16. 

what can cause a decrease in consumer demand for product x?

 

a decrease in consumer income

 
17. 

when the production or consumption of a good of a good involves an externality

 

someone not involved in buying or selling the good is affected

 
18. 

transfer payments include

 

social security benefits welfareunemployment benefits

 
19. 

two major virtues of the market system are that it

 

allocates resources efficiently and allows economic freedom

 
20. 

in general income taxes

 

tend to be progressive

 
21. 

in the market economy the distribution of income would be determined primarily by

 

the quantities and qualities of the resources which households supply

 
22. 

one reason why the quantity of a good demanded increases when its price falls is that the

 

lower price increases the real income of buyers enabling them to by more

 
23. 

the problems of aggregate inflation and unemployment are

 

major topics of macro economics

 
24. 

a right ward shift of the market supply curve ceteris paribus causes equilibrium

 

price to decrease and quantity to increase

 
25. 

which of the following can change without shifting either demand or supply ,ceteris paribus

 

the price of the good itself

 
26. 

which factor will increase the demand for a product

 

a favorable change in consumer taste

 
27. 

an increase in the supply of a product would most likely be caused by

 

an increase in consumer income

 
28. 

the demand for a product might shift as the result of a change in

 

consumer tastethe price of related goodsconsumer incomes

 
29. 

which of the following is a determinant of supply

 

taxes and subsidies

 
30. 

graphically the market demand curve is

 

steeper than any individual demand curves compromising it

 
31. 

the law of supply states that the quantity of a good supplied ceteris paribus ,increases

 

as its price increases

 
32. 

all economic systems must answer which of the following questions

 

what to produce for whom to producehow to produce

 
33. 

the location of the supply curve of a product depends on

 

the technology use to produce itthe prices of resources used in its productionthe number of sellers

 
34. 

a regressive tax is such that

 

tax rates are higher the smaller ones income

 
35. 

specialization in production is important primarily because it

 

results in greater total output

 
36. 

real GDP

 

gdp data that has been adjusted for changes in the price level

 
37. 

the per capita GDP

 

a measure of output divided by the total population

 
38. 

economists define investment as

 

an increase in business inventories spending on plant and equipment and new construction

 
39. 

the law of diminishing marginal utility states that

 

beyond some point additional units of a product will yield less and less extra satisfaction to a consumer

 
40. 

microeconomics

 

is concerned with individual economic units and specific markets

 
41. 

price elasticity of a demand shows how

 

quantity demanded responds to price changes

 
42. 

when demand is inelastic ceteris paribus

 

an increase in price leads to greater revenue

 
43. 

a price cut will increase the total revenue a firm receives ceteris paribus only if the demand for its product is

 

elastic

 
44. 

ceteris paribus as the number of substitutes for a good increases

 

the price elasticity of demand should become larger

 
45. 

which of the following causes the demand to be more elastic in respect to price.

 

longer periods of time to adjust to a change in pricei

 
46. 

if demand for a product is elastic the value of the price elasticity coefficient is

 

greater than 1

 
47. 

the demand for gasoline is

 

inelastic

 
48. 

in which of the following instances will total revenue decline

 

price rises and demand is elastic

 
49. 

utility refers to the

 

satisfaction that a consumer derives from a good or service

 
50. 

the law of diminishing marginal utility suggests that

 

people are willing to buy additional quantities of a good only if its price falls

 
51. 

marginal utility is the

 

change in total utility realized by consuming one or more unit of a goodd

 
52. 

productivity is

 

output per unit of input

 
53. 

list the determinants of price elasticity

 

necessities vs. luxuries-goods that are crucial to every day life( toothpaste, food, gas)luxuries-vacation, traveling, new car
availability of substitutes- if a price of a particular good increases, the consumer will look for other options at a cheaper price
price relative to income-if the price of a product exceeds an individuals income, then price changes will be important

 
54. 

list the determinants of demand

 

tastes incomeother goodsexpectations number of buyers

 
55. 

determinants of supply

 

technology factor costtaxes and subsidies expectationsother goods number of sellers

 
56. 

a price cut reduces total revenue if demand is

 

inelastic

 
57. 

a price cut does not change total revenue if demand is

 

unitary elastic (E=1)

 
58. 

the major uses of total output include

 

household consumption; business investment;government services;exports

 
59. 

price ceiling

 

upper limit imposed on the price of a good or service

 
60. 

price ceiling have three predictable effects

 

increase the quantity demanded; decrease the quantity supplied; create market shortage

 
61. 

price floor

 

lower limit imposed on the price of a good

 
62. 

price floor has three predictable effects

 

increases supply needed;decrease in demand;creates market surplus