Scarcity & Opportunity Cost
What is Scarcity? Any examples?
People's unlimited wants exceed limited resources.
Parking space, time etc.
What is the Law of Demand?
Ceteris paribus, as price rises, quantity demanded falls
What is poverty gap?
The amount of money that would have to be transferred to households below the poverty line o get them out of poverty.
What does the Gini Index measure?
Income Inequality
What is the world's poorest country by GDP per capita?
Burundi
What is opportunity cost?
Highest-valued alternative you have to give up.
What is an example of a complement and a substitute?
Complement: bicycle and bicycle helmet,
Substitute: Coke and Pepsi, Restaurant meals.
What is the difference between absolute and relative poverty?
Absolute poverty =A situation in which people experience actual hardship according to some objective criterion.
Relative poverty =A situation in which people are poor in comparison to other people
Other than regular wage income, what is included in money income?
Government transfers such as social security, unemployment compensation, rental and interest income.
In-kind transfers such as Medicaid, Food stamps are not included.
What are three recent causes of global poverty?
Coronavirus
Climate Change
Conflicts
What does the production possibilities frontier (PPF) represent?
Maximum output of two goods possible with given resources
What happens to the market and price of a good when price is set below the equilibrium?
The market will have a shortage, which drives up the market price until the price goes back to its initial equilibrium.
What is the official measurement for absolute poverty? Is it a fixed number?
Poverty line: Level of income sufficient to provide a family with a minimally adequate standard of living.
No, it is updated annually for inflation and changes with family size. Doesn't change with location.
What are happening to US lower-income, middle-income and upper-income class in terms of their share of US total income or wealth share
Upper-income share of total income and wealth has been increasing;
Middle class, shrinking
Low-income class, being flat or even decreasing.
What is the difference between GDP and GNP?
GDP = everything produced inside a country
GNP = everything produced by a country no matter where
Why are PPF curves in real life bowed out rather than straight?
Different people have different skills.
What factors influence demand side of the market
The price of the good itself,
Income,
Price of related goods,
Population and demographics
Price expectation
Etc.
What is about the historical trend with US poverty rate since 1959?
1959: 22.4%
1964-1965: ~19%
after 1965, 11% to 15%, up and down, changes with the economic situtation
How does capital gains tax affect the rich vs the poor?
Lower tax on investments and inheritance benefits the wealthy more than the poor.
Based on World Bank data in 2025, what is Extreme Poverty and where it is most prevalent?
Most prevalent in Sub-Saharan Africa and South Asia
What are two types of Economic Growth?
Specialized and Generalized
What is the difference between shift in the demand curve and movement along the demand curve?
Movement = price of the product itself changes, demand curve remains the same, quantity demanded changes, moving along the same demand curve as before.
Shift = market change, demand curve shifts
What are the two kinds of welfare program implemented in the US to help people get out poverty?
Can you name a few examples of each program?
Among all those programs, which program cost the largest expenditure from the government?
Cash and In-kind transfer program
Cash: Temporary Assistance to Needy Families
Supplemental Security Income
Earned Income or Child Tax Credit
In-kind transfer: WIC, SNAP, Medicaid, School Lunch, Section 8
Medicaid, the largest expenditure
What is intergenerational elasticity?
A predicted power of parents' earnings in explaining a child's earnings.
What are the limitations of using GNI per capita to compare living standards across different countries?
What other measurement could be a better economic indicator?
GNI per capita doesn't tell income distribution and composition of the output.
Life expectancy, infant mortality rate,
school attendance, number of doctors, nurses or hospitals per 1,000 people