Funadamentals learnsmart

Economists use the phrase _____ to refer to the positive gains enjoyed by both buyers and sellers when they trade.

"trade creates wealth"

A production possibilities frontier that illustrates a 1-for-1 trade off between goods is drawn as:

a straight, downward-sloping line.

Because the world is characterized by scarcity, people must choose between different uses for the resources at their disposal. In economics, we refer to this as:

allocating resources.

Combinations of production that fall inside the production possibilities frontier are _______ but not efficient

attainable

Comparative advantage refers to:

being the lowest relative opportunity cost producer of a good.

A model that concisely describes how goods, services, resources, and money flow back and forth in an economy is the:

circular flow model.

As long as there are differences in opportunity costs, there are __________ advantages and there will be potential for trade to make both parties better off.

comparative

If you are relatively better at something, then you are said to have a(n) _____ advantage in that activity.

comparative

The simple model of production assumes that the opportunity cost of production is:

constant

When you see a production possibilities frontier (PPF) drawn as a straight line, the opportunity cost of one good or service (in terms of units of the other good or service that must be given up) is assumed to be:

constant

As the amount of an activity increases, its marginal benefit:

decreases.

The wealth - or additional well-being - created by trade -

does not have to be monetary.

The quality of a(n) _______ model can be measured by how well it reflects reality and whether it gives us insights that can be used in the real world.

economic

________ is the study of how individuals and societies allocate scarce resources among many competing uses and how this decision-making affects the economy at large.

economics

When resources are allocated in such a way that it is possible to increase the production of one good only by decreasing the production of another, then the allocation of resources is said to be

efficient

Economics is about:

how people make choices in a world of scarcity.

Funds that firms pay for resources are costs to firms but they represent which of the following type of flow to households?

income

As the amount of an activity increases, its marginal cost:

increases

On a production possibilities frontier (PPF), if you are able to increase the production of both goods at the same time then, initially, resources were allocated _________

inefficient

Resources are also called:

inputs because they are transformed into output in the production process.

When you decide - after studying for three hours - that another hour of sleep is more beneficial to you than a fourth hour of studying, you are engaging in:

marginal decision making.

When you decide to turn off the bedroom light on your way to the kitchen so that you can save a little money on your electric bill, you are engaging in:

marginal decision making.

The terms of trade that are beneficial to both parties are prices that lie between both the parties' _______ costs

opportunity

_____ cost is most plainly visible when spending more money on one thing means that less money can be spent on another thing.

opportunity

The value of the next-best forgone alternative is the _______

opportunity cost

A useful way to visually represent the data in a production possibilities schedule is by means of a graph called a(n)

production possibilities frontier graph

The production possibilities frontier, or curve, is a graphical representation of the

production possibilities schedule.

Self-interest, marginal decision making, and optimization form the basis for:

rational decision making.

According to the circular flow diagram, households and firms interact in the ______ and the ______.

resource "factor" market; product market

Because the world is characterized by scarcity, people must allocate the limited ________ at their disposal among many competing uses.

resources

The points on the production possibilities frontier show how we allocate our scarce ________ to the production of two different goods or services.

resources

_________ is/are also called factors of production since they are transformed into output during the production process.

resources

Economics studies how individuals and businesses make decisions in a world of _______ resources.

scarce

Due to the ______ of natural resources, we cannot have all the housing and all the forests we may want.

scarcity

A strong economic model allows us to analyze the economic events of the world by:

simplifying a very complex economic world.

Because of differences in opportunity costs, individuals and businesses

specialize in the production of the good for which they wield a comparative advantage.

The term "scarcity" describes the fact that people's ______ wants cannot be completely satisfied with ______ resources.

unlimited; limited

Individuals and countries specialize because the opportunity cost of producing goods and services:

varies