Flashcards
Macroecon Exam 1
Cards in this deck (21)
- 1Why does scarcity existScarcity exists because we can't satisfy our wants
- 2How is opportunity cost definedWhat you lose when you do something else
Ex. Going to school OC: You can't work - 3What do economist call the cost of one unit increase in activityMarginal Benefit
- 4How would economist describe making a rational choiceWhen they look at marginal benefit and marginal cost to compare
- 5What do economist mean by an incentiveIt can be a reward or penalty that can encourage or discourage an action
- 6What is a capital goodA good that will increase productivity or help your production in future years
- 7What are the categories for factors of productionLand, Labor, Capital, Entreprenuership
- 8What things lead to increases in human capitalEducation, Job training and experience help this capital
- 9What two groups of decision makers are represented in the basic circular flowThe two groups are firms and households
- 10What is the difference between the two markets in the circular flow modelFactor markets are for land, labor, capitol, and entrepreneurship while goods markets are for everything consumers buy
- 11What does the Production Possibilities Frontier illustrateThis illustrates the boundary of a combo of goods and services that can be produced and the combos that can't be produced. (Basically what can you make with what you have.)
- 12How is unemployment shown on a PPF diagramThis is shown when the point isn't on the PPF curve and is described as Inefficient production
- 13What is the formula for calculating the opportunity cost of producing one more unit of productThe formula is a ratio and are also inverses
- 14Why do opportunity costs increase as we move along a country's PPFBecause the more you make the less resouces you have to produce the other product
- 15How do economist define economic growthBy the sustained growth of a PPF
- 16What is the opportunity cost of economic growth and what is the benefitThe opportunity cost is either capital goods or consumption goods and the benefit is we can have more capital and consumption goods
- 17What is the relationship of comparative advantage and absolute advantageAbsolute advantage means the person is more productive. Comparative Advantage means the person can do the work at a lower opportunity cost. One is about productivity and the other is about opportunity cost.
- 18What is the definition of comparative advantageWhen someone can do the same job or work at a lower opportunity cost
- 19What do economist mean by the phrase quantity demandedThis is a movement that is vertical on the demand curve and shows where is the demand of the consumers
- 20How would a change in the number of buyers affect the demand for a goodThe demand would increase if the population incresed because their is more consumers and V.V.
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