"Market Magic?"
Name the kind of economic system that exists in the North Sentinel Islands (in the Indian Ocean)
Traditional
Name this model that shows the factor and product markets graphically.
Circular Flow Model
When you make small incremental changes to a plan of action this is called thinking at the __________ (give the specific economic term)
Margin
Charles L. Wheelan
Mihai can produce 2 essays in 1 hour and Angela can produce 3. Who has the absolute advantage?
Angela
North Korea has this kind of economic system
Command (Centrally Planned)
In one of our first models there is a "factor market": what are the 4 factors of production? Name all 4
Land, Labor, Capital, Entrepreneurship
Differences in Opportunity Costs are what determine patterns of trade and specialization. This is referred to as the principle of ___________ _____________
Comparative Advantage
Give the Full Name of our Textbook Author "Principles of Economics"
Gregory N. Mankiw
According to the graph, Ben's opportunity cost of 1 lb of ice cream is: ______
4 lbs of cones
What 3 questions must all economic systems answer?
What to produce (what should the output be)? How to combine the resources? Who will get the output?
When 2 countries have determined what products to specialize in and have made an arrangement to trade one product for another. What do economists call the trade ratio that is agreed upon between the two producers? __________ ___ __________
Terms of Trade
When an economist makes a policy recommendation based on their opinion and judgement (in addition to facts), this is referred to as ____________ . Give the economic term that refers to this.
Normative
Name the concept/idea that refers to the fact that a relatively efficient resource allocation occurs in a market system without anyone directing it. This is referred to as the ____________ ___________ of the market.
Invisible Hand
According to the graph, who has a comparative advantage in which product?
Ben has a comparative advantage in cones
Jerry has a comparative advantage in ice cream
Efficiency Equity tradeoff. The market is highly efficient and productive, but this is at the expense of fair distribution (equity)
Imagine a PPC for Cars and Computers. Imagine that there were an innovation in car production that didn't affect computer production. How would this SPECIFICALLY be depicted on a PPC model?
Mankiw's Principle # 7 states: "government can improve market outcomes", and he identifies several instances where this would be true. Using economic terminology name at least one of these specific instances.
Externality
Market Power
Public Goods
Redistribution of Wealth
Name the person credited with developing the principle of Comparative Advantage
David Ricardo
According to the graph the Opportunity cost of 1 basket for Missouri is
3/4 birdhouse
Name 5 features of the Market system
Productive, Efficient, Amoral, Competition, Profit Motive, Self-interest, Price Mechanism, Self-Correcting, Amoral, Laissez Faire, Freedom and Choice, Individuals own the resources, (possibly others)
Using economic terminology explain why some PPCs have a curvilinear shape, whereas others are linear.
When the economic resources, i.e., the land labor, capital that is used to make the two products are more specialized in the production of one good over another this would result in increasing opportunity cost and a curved PPC. If the resources are easily adapted to both products then it will be a line (pizza and calzones).
Explain the tradeoff that exists for Mankiw's principle # 10, which is referred to as the Phillips Curve. Explain exactly what the tradeoff is with the Phillips Curve.
If the Fed reduces inflation it results in increased unemployment; if the Fed reduces unemployment it results in increased inflation.
What kind of efficiency is achieved when production meets society's desires. Use the economic term that begins with "A"
Allocative Efficiency
Who has C.A. in which products?
Montana has a CA in Birdhouses and Missouri has a CA in baskets.