social science studying how we use scarce resources to best meet unlimited wants
What is Economics
100
third party bears a cost or benefit from a transaction
What is an externality
100
the ability of a country to produce a good using fewer inputs than another country
absolute advantage
100
Demand side of the market
What are buyers
100
Scenario of the principal agent problem
What is the agent is hired to make the principal money but has their own agenda that they want to follow instead that doesn't have the best interests of the agent in mind
200
Opportunity cost
What is the value of the next best alternative
200
Coase theorem states:
What is 1. Small number of people involved 2. Clearly defined property rights 3. Minimal contracting costs
200
what does the production possibilities frontier show?
all the combinations of goods that a country can produce given
200
Price of a compliment increases
What is the demand decreases
200
Any intentional effort is
what is labor
300
Invisible hand
What is the notion that, under competition, decisions motivated by self-interest promote the social interest.
300
people who enjoy the benefits without paying for part of the cost
What are free riders
300
US can produce 5 shirts in one hour and Japan can produce 5 shirts in 30 minutes. who has the absolute advantage
japan
300
Buying more inferiors goods affect shown in demand
What is when income decreases but demand increases
300
Where is consumer surplus on a graph
Above price equilibrium and below the demand curve
400
Find both on the individual level and as a whole the MR & MC
Tax: $25
Arkansas 45
Missouri 10
Texas 15
Total
Marginal cost is higher than marginal benefit (as a whole)
Total: 70-75=-5 too high
Arkansas 45-25=20
Missouri 10-25=-15
Texas 15-25=-10
400
Give an example of a positive externality
You garden, which provides nectar for beekeepers who gain increased honey as a result of the nearby flowers of your garden
400
Sweden = 10 cell phones or 5 computers
France = 6 cell phones or 1 computers
who has the absolute advantage for cell phones and who has the comparative advantage for cell phones?
AA for cell phones = France
CA for cell phones = Sweden
400
Shifters of supply
What is the price if resources, technology, number of sellers, price of related goods, expectations, taxes/subsidies
400
When can deadweight loss occur?
Externalities, taxes, information
500
both parties don’t have same information and the party with better information has incentive to not disclose
What is Asymmetric information
500
Is smoking a negative or positive externality and why
Negative because others can inhale your smoke and increase their chances of health related problems
500
anything on the line represents
what is full employment
500
Which doesn't shift demand: A. number of buyers B. future expectations C. price D. tastes and preferences
PRICE
500
5 economic questions every society has to answer:
1. what to produce (what consumers are willing and able to buy)
2. who gets the products (willing and able to pay for it)
3.how to produce ex: jeans (machinery vs human production) (costs the least)
4. how will we accommodate change
5. how to promote progress (self interest and incentives)