Show:
PPC Curves
Efficiency
Opportunity Cost
Macro vs Micro, Positive vs Normative
Other
100

Any point on the PPC curve is considered what?

Efficient (Productively efficient)

100

Any point inside the PPC curve is considered what? 

Inefficient

100

What is opportunity cost?

What you're giving up by deciding to do something else. The next best alternative you forgo by making another decision. 

100

Microeconomics or Macroeconomics?


The demand for electric cars goes up when gas prices go down.

Microeconomics

100

What are the 2 factors that influence economic growth?

Increase/decrease of available resources

Improvement/decline of technology

200
What happens to the PPC when there is economic growth?

It shifts outward (away from the center)

200

If I can produce more of both goods, am I producing efficiently?

No you are inefficient

200
I have $40. If I spend that on train tickets to go to Orlando instead of buying a nice dinner, what's my opportunity cost for buying the train tickets?

The enjoyment I would have gotten from the dinner

200
Positive or Normative


People should pay their taxes to avoid the consequences from the IRS

Normative

200

What does the term "marginal" mean?

One additional or one more

300

What does the PPC NOT show us?

The allocatively efficient or best points

300

What's the difference between allocatively efficient and productively efficient?

Productive: I'm using all my resources (many different productively efficient combinations)


Allocative: This one combination maximizes my happiness/profit. 

300

I can either buy a vacation for $500 or get a used car for $500. If I choose to buy the vacation, what's my opportunity cost?

The benefits of having the car

300

Microeconomics or Macroeconomics?


The national interest rate is slowly lowering, making it easier for people to borrow money. 

Macroeconomics

300
In what type of economy does the government control what is produced, who can produce, how much is produced, and what price things are produced?

Command economy

400

What does a PPC show us?

What combinations of 2 goods we can make with the resources we have. OR

The opportunity costs of producing more of one good. OR

The productively efficient combinations given the resources we have.


400

Can we see productively efficient points on the PPC? Can we see allocatively efficient points on the PPC?

We can see productively efficient points but not allocatively efficient ones. 

400

What is the opportunity cost of sleeping in based on the ranking of my options of what to do on a Saturday below: 

1. Sleep in

2. Go to the beach

3. Hang out with friends at someone else's place

4. Go see your extended families

5. Workout all day

Going to the beach

400

Positive or Normative?


The demand for electric cars goes up when gas prices go down.

Positive

400

How do property rights incentivize people to maximize the value of what they own?

Because they can either sell it back for money or don't have to pay for replacements or broken parts. 

500

Why does a PPC typically bow outward (is curved outward)?

The more of one good you produce, the opportunity cost increases​​​​
500

What does it mean to be efficient?

I can't produce more of one good without sacrificing the production of another. 

500

If my opportunity cost of going to school (sleeping) is higher than the benefit from going to school, what should I do?

I should sleep and not go to school

500

Positive or Normative?


Many people believe the Fed should lower interest rates to lower inflation. 

Positive

500

I should keep buying a good until what point? (In other words: how do I know what is the optimal amount of something I should buy?)

When the marginal benefit equals the marginal cost