Eco 1

absolute advantage

the ability of an individual, a firm, or a country to produce more of a good or service than competitors, using the same amount of resources

comparative advantage

the ability to produce a good at a lower opportunity cost than another producer

Using the production possibility frontier model, when there are unemployed or unused resources, societies producing at a point...

Inside the PPF curve

Germany has a comparative advantage in producing automobiles if...

It can produce automobiles at a lower opportunity cost than other countries

If Ben had an increase in uncertainty about his future income he would most likely

Lower his current consumption

Most Societies depend on ... to allocate scarce resources

Millions of firms and households

An increase in demand is shown by

Moving the demand curve to the right

A nation can produce at a point outside it's PPF ...

Never

If the price of chocolate chip cookies falls, then...

There is a movement down word along the supply of chocolate chip cookies

What does it mean to make decisions "at the margin"

To compare the marginal costs and marginal benefits of each decision

complement goods

Two or more goods that tend to be used together. If two goods are complements, an increase in the price of one will lead to a decrease in the demand of the other.

inferior good

a good that consumers demand less of when their incomes increase

Quota

a restriction placed on the amount of a product allowed to enter or leave a country

A demand curve with a positive slope is an exception to the law demand

and a vertical demand curve is also an exception to the law of demand

For an inferior good a decrease in income increases the demand for the (inferior) good

and the supply curve does not shift

A quantitive restriction on the import of a particular good is...

A quota

Maria is producing a combination of two goods at a point on her PPF. Which of the following statements is true?

All statements are true: - Maria's PPF is downward sloping. - In order to produce more of one good, Maria must produce less of the other. - Maria is utilizing all of her productive resources. - Maria faces is an opportunity cost of increasing the production of either good

The relative price of cereal rose by about 10% in 1988, partly because more adults started eating cereal, especially oats cereal's, to help lower cholesterol. The main effect in the old market was...

An increase in the demand for oats but not the change in supply.

The demand curve...

Can also be the marginal benefit curve

When the price of oil jumped in the 1970s, people but better insulation. In that sense, oil and installation are...

Substitutes

The price of jet fuel rises. This rise shifts the...

Supply curve of airplane trips leftword

Comparative advantage mostly specifically refers to

The ability to produce a good or service at a lower opportunity cost than another producer

A rational decision maker will take an action only if...

The marginal benefit of that action exceeds the marginal cost

If production of two goods is currently at levels such that we are on the production possibilities frontier...

In order to produce more of one good, we must produce less of the other

People buy fewer motorcycles when their income increases. Therefore, used motorcycles are....

An inferior good

Good X and Y are complements. A shift of supply of X to the right, shifts the...

Demand for Y to the right

The term "marginal" mostly means

Extra

Both Supply curves and demand curves are

drawn on a diagram with quantity on the horizontal axis

substitute goods

goods that satisfy a similar need, so that one good can be used instead of the other. If two goods are substitutes, an increase in the price of one leads to an increase in the demand for the other.

An increase in income shifts the demand curve for an

inferior good to the left

If the number of toothbrush producers decreases, then the supply curve of the toothbrushes

shifts leftword and the supply decreases

Which of the following questions might be answered by a microeconomist - how does monetary policy impact overall price levels in a country? - what will be the impact of government subsidies for ethanol production on the market for corn? - what is the long-run impact of deficit spending on the market for loanable funds? - what is the long-run relationship between the inflation rate and the unemployment rate? - what policies will help a poor country "catch up" to a rich country?

what will be the impact of government subsidies for ethanol production on the market for corn?