59 Cards in this Set
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What Issues does economics address and Examine?
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Economics addresses all
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Economics primarily addresses the problems associated with
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Scarcity
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Why can't we have all the goods and services we want?
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Humans want unlimited and resources are limited
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Physical Capital means
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Man-made goods
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Human Capital means
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Education of workforce and training/job experince
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Tradeoffs are required in any decision because wants are____ while resources are____
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Unlimited; scarce
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Spends 4 hours, paying $50 instead of working $10 an hour. What is economic price decision?
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$90
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Which of the following statements is normative?
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The government should focus its efforts on the problems faced by the middle class
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Economic theory is valuable only if it
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Can be tested
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An economic model
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Must first simplify reality in order to focus on crucial elements
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Y is what variable?
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dependent
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X is what variable?
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independent
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PPF demonstrates
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Problems of scarcity, Concept of trade-offs and opportunity costs and available, efficient choices to society. (All of the above)
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Combinations of goods outside the PPF
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Are unattainable
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Combinations of goods that Lie on the PPF are
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Efficient
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Combinations of goods that Lie Inside the PPF are
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Possible, but inefficient
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On a PPF, economic growth is shown as
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Outward shift in the curve
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On a PPF, a technological advance in the production of one good is shown as
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A Rotation outward along the axis of the good
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How do economists measure the economic size of a country?
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By Market Value
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How do economics measure a country's standard of living?
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By Country's output value divided by its population
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Characterize the economic size of the US?
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Worlds Largest
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Characterize the standard of living in the US
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Relative wealthy economy, one of the world's richest
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3 questions of society the way they have always been ansewred
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Traditional Economy
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3 questions of society through a central authority
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Command Economy
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3 questions of society through prices is
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Market Economy
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The US economic system is best categorized as an
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Mixed Economy
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Main strength of Capitalist
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Considered the most efficient system
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Father of modern Economics?
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Adam Smith
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Capitalist economic system places a greater emphasis on____ while the socialist system places a great emphasis on _____
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Self-interest; collective interest
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Which economist viewed capitalism as inherently unstable?
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Karl Marx
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Strengths and/or weaknesses of capitalism?
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Thought to produce the largest economic 'pie, and yields a very unequitable distribution
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Examples of Socialist programs in US:
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Roads, Medicare, Schools, Police
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Strengths and/or weaknesses of Socialism?
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Thought to produce small 'pie' but is split more evenly
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Idea of an Invisible Hand?
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Individuals motivated by self-interest is the best method to serve interests of society
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In a typical market, the Demand curve is composed of ____ and slopes____
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Buyers; downwards
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Along a typical downward sloping demand curve, what is NOT held constant?
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Price of the good itself
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Along a typical downward sloping demand curve, what is Held constant?
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(ALL)- income, tastes, prices of goods, future price
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Which of the following would shift the demand curve?
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Change in incomes of consumers and tastes or preferences
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When referring to a graph, a decrease in Demand means that?
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the demand curve has shifted Left
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When referring to a graph, a decrease in quantity demanded means that
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There has been a movement up along the demand curve
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All of the following will cause an increase in demand EXCEPT
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A decrease in the price of the good
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In a typical market, the supply curve is made up of ___ and slopes ___
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Sellers; Upwards
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Which of the following is a supply shifter?
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Expected Price and Price inputs
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Which of the following would cause a movement along the supply curve?
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Change in the price of the good itself
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When referring to a graph, an increase in supply means that
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The supply curve has shifted right
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When referring to a graph, an increase in quantity supplied means that
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There has been a movement along the supply curve
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In general what happens when consumers want more of the good or service?
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Causes the price to rise
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in general what happens when buyers want less of the good or service?
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Causes the price to fall
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Generally, anytime there is an increase in demand, the model of supply and demand would predict equilibrium price to ____ and quantity to ____.
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Rise; Rise
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Generally, anytime there is a decrease in demand, the model of supply and demand would predict equilibrium price to ____ and quantity to ____.
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Fall; Fall
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in general what happens when sellers produce/provide less of the good or service?
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Causes the price to rise
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in general what happens when sellers produce/provide more of the good or service?
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Causes the price to fall
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Generally, anytime there is an increase in supply, the model of supply and demand would predict equilibrium price to ____ and quantity to ____.
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Fall; Rise
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Generally, anytime there is a decrease in supply, the model of supply and demand would predict equilibrium price to ____ and quantity to ____.
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Rise; Fall
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Generally, anytime there is a rise in the price of a substitute good, the model of supply and demand would predict equilibrium price to ___ and quantity to ____.
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Rise; Rise
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Consider the market for blue jeans. Suppose that khaki’s become more fashionable. In the model of supply and demand, this would shift the ____ curve to the ____.
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Demand; Left
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Consider the market for blue jeans. Suppose that there is an improvement in the technology of blue jean production. In the model of supply and demand, this would shift the ___ curve to the _____.
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Supply; Right
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Suppose that the price of steel, an important input to automobiles, falls. What does the model of supply and demand will predict will happen in the market for automobiles?
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Equilibrium price will decrease and quantity will increase
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Public goods are often best provided (supplied) by
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Governments
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Econ 201: Test 3