Scarcity & Resource Allocation
In a Command Economy, how is the quantity of computers produced determined?
By the government
What does a linear PPC indicate?
Constant Opportunity Costs
or
resources are completely adaptable for either product
If Nation X produces coffee at a higher opportunity cost than Nation Y, what can we say about Nation Y?
Nation Y has a comparative advantage in producing coffee
Define Opportunity Cost
The value of your next best alternative
What is the additional satisfaction received from consuming an additional unit of a good called?
Marginal Utility
The study of economics exists because people are faced with the problem of ...
scarcity
Where are the efficient points located on the PPC?
Anywhere on the curve
If National A needs 3 hours to make a car, which type of comparative advantage question is this?
Input Question
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minus 200 points
What is the formula to calculate the maximum benefit from consuming goods X & Y
MUx/Px = MUy/Py
Which Factor of Production does human capital belong to?
Labor
If a country increases production of capital goods, what do we expect in the future?
Increased economic growth
A shift outwards of the PPC
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Bonus 300 points
When should you stop consuming?
When the marginal benefit equals the marginal cost
When Marginal Utility is falling but still positive, Total Utility is ...
increasing at a decreasing rate
What are the three questions each economic system needs to address?
What to produce
How to produce
For whom to produce
If there is a technological improvement in production, what change do we see on the PPC?
The PPC shifts outward
Define Absolute Advantage
The ability of a country to produce a good at a lower cost in term of resources than another country
OR
The ability to produce more than another country with the same resources
Define the Law of Diminishing Marginal Utility
As a person consumes more of an item the satisfaction (or utility) obtained decreases
When Marginal Utility is zero, what is happening to Total Utility?
It is constant at maximum
What are the four Factors of Production?
Land
Labor
Capital
Entrepreneurship
If the PPC is bowed out from the origin, what does that tell us?
Increasing opportunity costs
In regards to comparative advantage, the reason countries engage in trade is because
They can consume outside of their PPC
Surprise inside: Pass or Keep
Take 500 from another team.
If a good is available free of charge, an individual will consume it until ...
Marginal Utility is zero