Definitions
Graphs
Trade
Economic Systems
Marginal Analysis
100
Scarcity
We have unlimited wants but limited resources
100
Is Point G efficient, inefficient, or impossible?
Inefficient
100
Papa John can produce 100 pizzas, while Ben can produce 20, who has absolute advantage?
Papa John, because he can produce the most
100
In a ________, the government owns all of the resources determines what goods/services are produced, and as who consumes these goods and services.
Command or centrally planned economy.
100
Instead of playing video games at home, you could have gone out to eat with your family or hung out with your friends. This is an example of…
Trade-Offs
200
Microeconomics
Study of "small" economic units such as individuals, firms, and markets
200
If a firm produces wheat and corn, would the PPC be curved or straight? Why?
Straight, since the two goods require interchangeable resources.
200
Papa John can produce 100 pizzas or 200 burgers, Ben can produce 20 pizzas or 200 burgers, who has comparative advantage?
Ben, because he has lower opportunity cost
200
What type of economic system do almost all countries have?
Mixed Economy
200
The price of a ticket to a play is an example of this type of cost and the forgone wage and time during that period of seeing the play is an example of this type of cost.
Explicit cost; Implicit cost
300
Positive Statements
Based on facts, avoids value judgements
300
Assume the firm is producing at point C. If there is an increase in the demand for computers, what will happen?
Move to point D or E
300
Input or output? Months to produce cars and planes.
Input
300
Cuba and North Korea have what type of economic system?
Centrally planned (Command)
300
Calculate and complete the following table using marginal analysis to calculate the Marginal Utility / Benefit given the total utility and the price of pizza being $2.
0 - 8 - 6 - 5
400
Price
Amount the buyer/consumer pays
400
Assume the firm is producing at point D. If there is an improvement in computer technology, what will happen?
Outward shift for computers only
400
If two nations specialize according to the law of comparative advantage and then trade with each other, which of the following is true?
A smaller number of goods would be available in each trading nation
Total world production of goods would decrease
Everyone within each nation would be better off
Each nation would increase its consumption possibilities
One nation would gain at the expense of the other nation
4 is true
400
Why do centrally planned economies often result in poor-quality goods, shortages, and unhappy citizens?
There is little incentive to work hard and innovate and central planners have difficulties predicting preferences of the citizens
400
The concept of MUx/Px = MUy/Py is better known by this name, where the consumer’s money should be spent so that the marginal utility per dollar of each goods equal each other.
Utility Maximization Rule
500
Cost
Amount the seller pays to produce a good
500
What is the opportunity cost of moving from B to E?
28 bikes
500
What terms of trade benefit both countries?
Trading 1 radio for 2 pineapples will benefit both
500
Which of the following is FALSE of a free market economy?
Individuals own resources and determine the production and consumption of goods.
Typically results in efficient production of the goods that consumers want, produced at the lowest prices and the highest quality.
There is centralized planning in economic decision making
There is little government involvement in the economy
3 is false
500
Since customers consume until marginal benefit is equal to the marginal cost, when would the customer stop buying the product using the following chart
3 products