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First Exam Review
Chapters One, Two, Three, and Twenty
25
Economics
Undergraduate 2
02/04/2014

Additional Economics Flashcards

 


 

Cards

Term
What does movement on the supply and demand curves to the left and right equal?
Definition

Right=Increase

Left=Decrease

 

Term
How is opportunity cost calculated?
Definition

2 fish = 4 potatoes

If finding opporunity cost for potatoes divide both goods by the quantity of potatoes (e.g. 4/4 potatoes = 2/4 fish)

 

Answer: 1 potatoes = 1/2 fish

Term
What will shift the supply curve?
Definition
Anything that changes the cost of production. (e.g. taxes, technology, price of inputs)
Term
What will shift the demand curve?
Definition
Some circumstances which can cause the demand curve to shift in include: Decrease in price of a substitute. Increase in price of a complement. Decrease in income if good is normal good.
Term
What is the difference between Micro and Macro Economics?
Definition
Micro investiages how economoics factors affect the individual. Macro investigates how economics factors affect the nation as a whole.
Term
If Elory's tastes change, how does this affect his budget line.
Definition
The budget line does not move, however his place on the budget line does move. (This is caused by his change in preference. Preference will allow one to shift their use of resources, in this case their budget. Should Elory's budget increase then the line will shift to the right because he can buy more of both products.)
Term
Economics Profits indicate what?
Definition
If an industry is successful, there will be opportunities to grow. Should a company be gaining economic profits, then more companies will be enticed to enter the market and take a share of their economics profits.
Term
What does clearing the market mean?
Definition
Clearing the market means that quantity supplied equals quantity demanded. Thus there is no excess demand nor supply in the market (i.e. no surplus or shortages).
Term
What is the difference between and normative and positive argument?
Definition

Normative=Value based opinion

Positive=Number based argument

Term

In a market system scarce goods are allocated through the operation of?

 
Definition
what must be sacrificed in using a resource for its next best use.
Term
What best describes the concept of utility and economic behavior?
Definition
Satisfaction from consuming goods or services?
Term
The scientific method is the technique used by economists to determine?
Definition
Economic Principles
Term
Why is entrepreneurial ability distinct from labor even though both are considered as a category of economic resource?
Definition
Because entrepenural ability is not directly engaged in production
Term

Property rights are important because they:


Definition
Encourage cooperation by improving the chances of mutually agreeable transactions.

 

Term

From society's point of view the economic function of profits and losses is to:


Definition
Reallocate resources from less desired to more desired uses.

Term
Explain the Cicular Flow Diagram
Definition
  • One the outside bussinesses have costs, which equate to income for the families. Families have expenditures which equate to profits for the companies
  • On the inside, household provide the factors of production with the companies provide services.
Term
In terms of the circular flow diagram, households make expenditures in the _____ market and receive income through the _____ market.
Definition
Product, Resource
Term

In terms of the circular flow diagram, businesses obtain revenue through the _____ market and make expenditures in the _____ market.

 
Definition
Product, Resource
Term
The use of capital in the production process
Definition
improves efficiency, increases output, and provides for growth.
Term
What is total revenue
Definition
Proceeds made by sales, but be careful not to think that they are profits made after taking out the cost of production. They are simply what was made selling.
Term

Price Ceilings are good for whom?

Price Floors are good for whom?

Definition

Price Ceilings are good for the consumers

Price Floors are good for the producers

Term
What are determinants of demand
Definition
Income, price of related goods, tastes and prefrences,  number of consumers
Term
Which statement is consistent with the law of supply?
 
Definition
An increase in market price will lead to an increase in quantity supplied.
Term
What causes a supply curve to rise?
Definition
Rising opportunity and Marginal costs. Be careful not to put an answer that affects the demand curve, or shifts the supply curve.
Term
What will happen to supply of auto tires if the price of big tires goes up.
Definition
The supply will increase, because the producers will shift production of big tires to auto tires.
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