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Chapter 1
Chapter 2
Chapter 3
Definitions
Definitions II
100
Capital refers to all the cash money a company has. True or False?
False. In economics, we refer as capital to all assets that can be used as inputs for future production; such as machinery, computers, buildings, etc.
100
What does the slope in the PPF means?
It shows scarcity ad opportunity cost, that is why it is downward sloping.
100
What does the law of demand states?
As the price of a good rises, the quantity demanded of the good falls. The relation between price and quantity demand is negative correlated, meaning inverse relation.
100
What is scarcity?
It is the limitation of resources people face because there are not enough resources to satisfy all people's needs.
100
What is economics?
The science of scarcity
200
What are the four resources we use in economics?
Land, Labor, Capital, Entrepreneurship
200
An increase in the quantity of resources shifts the PPF:
Outward. (To the right)
200
What does the law of diminishing marginal utility states?
For a given time period, the marginal (or additional) utility or satisfaction gained by consuming equal successive units of a good will decline as the amount consumed increases.
200
What is utility?
It is the level of satisfaction (happiness) of a person.
200
Entrepreneurship refers to:
the talent for organizing the use of land, labor and capital, among other things.
300
Which of the following is an example of a positive statement? a)The U.S. public should devote more resources to education. b)The poor should pay lower taxes and the rich should pay higher taxes. c)Soap operas should be taken off television. d)If you drop a ball from the top of a building, it will fall to the ground.
D - Since a positive statement deals with "what is" while normative economics deals with "what should be"
300
According to the Law of increasing opportunity cost: As _________ cars are produced, the opportunity cost of each additional car is ________ than for the preceding unit.
more, greater
300
What is the difference between Demand and Quantity Demanded?
An increase in QUANTITY DEMANDED is caused by: a decrease in the price of the product and it is represented as a movement ALONG the demand curve. A DEMAND curve illustrates how much the quantity demanded changes when the price changes. A change in demand is represented with a SHIFT of the demand curve.
300
What is opportunity cost?
It is the highest valued alternative one forfeits (give up) in order to have additional benefit of the other option.
300
Choice implies:
Opportunity Cost
400
At the optimal level of an activity, the activity’s marginal benefit must: a)be zero. b)be greater than zero. c)equal the marginal cost of the activity. d)exceed the marginal cost of the activity.
C) Equal the marginal cost of the activity
400
1-Any point along the PPF is: 2-Any point inside the PPF is: 3-Any point outside the PPF is:
1-Attainable and efficient 2-Attainable BUT inefficient 3- Unattainable
400
*If two goods are complements, the demand for one _____ as the price of the other _________. *If two goods are substitutes, the demand for one _____ as the price of the other __________.
* rises, falls / falls, rises * rises, rises / falls, falls
400
The synonym economists commonly use for "additional" is:
marginal (cost, benefit)
400
What is ceteris paribus?
It is an assumption used to examine the effect of one influence on an outcome while holding all other influences CONSTANT.
500
Which of the following would NOT be considered a macroeconomic topic? a. the reasons for a decline in the price of crude oil b. the cause of a downturn in the economy c. the effect of the government budget deficit on inflation d. the causes of inflation and unemployment
A - Since macroeconomics deals with cause and effects for the entire economy, while microeconomics deals with the decisions of individuals and firms. Behaviors and choices from a single market.
500
You are now producing 100 computers and 80 phones. If your company wants to increase the production of phones up to 100, what would be your opportunity cost all other things constant (ceteris paribus)?
20 computers
500
What is the law of supply and how does supply is represented in the graph?
As the price of a good rises, the quantity supplied of the good rises, and as the price of a good falls, the quantity supplied of the good falls, ceteris paribus. It is represented upward sloping. Any changes in quantity supply is a movement ALONG the supply curve.
500
1- What is comparative advantage? 2- What means specialization?
Comparative advantage is the situation where someone can produce a good at lower opportunity cost than someone else can. Specialization occurs when producing goods in which you have comparative advantage.
500
How do you calculate opportunity cost using the slope?
With the formula: Change in "Y" over Change in "X"