ECN 201 (Fundamentals)

As the amount of an activity increases, its marginal ______ falls and its marginal _____ rises.

-Benefit -Cost

The circular flow model shows how ___________ and _____ interact in two key markets: the resource market and the product market.

-Household -Firms

The law of ___________ __________ cost says that because some resources are better suited to producing one good or service than another, as the production of a good or a service increases, the _______ cost of each additional unit rises.

-Increasing Opportunity -Opportunity

Capital is sometime divided into two categories: _________ capital and __________ capital.

-Physical -Human

the term "scarcity" describes the fact that people's____________ wants cannot be completely satisfied with __________ resources.

-Unlimited -Limited

Circular Flow Model.

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

Production Possibilities Schedule

A table that shows the possible combinations of two different goods or service that can be produced with fixed resources and technology is the:

Production Possibilities Schedule

A table that shows the possible combinations of two different goods or services that can be produced with fixed resources and technology is the:

MB<MC

A waste of resources that could have been used to produce something else occurs when:

The ___________ cost associated with one more unit of an activity is the marginal cost.

Additional

Because the world is characterized by scarcity, people must _________ the resources at their disposal to many competing uses.

Allocate

Because resources are scarce, they must be ______________ between competing uses.

Allocated

At a local town council, people debated a proposal that would change the _________ of public space for recreational use by demolishing a skate park and building an arboretum.

Allocation

The process of assigning a good service, or resource to one use instead of another.

Allocation

The process of assigning a good, a service , or a resource to one use instead of another describes "___________".

Allocation

the more of a good or a service that is consumed in a given period of time, the lower the marginal________ that is associated with each additional unit.

Benefit

When that marginal _______ equals the marginal ______, there is no incentive to either increase or decrease the level of the activity performed.

Benefit / Cost

Combinations ______ the production possibilities frontier are impossible with the current resources and technology.

Beyond

The tools, machinery, infrastructure, and knowledge used to produce good and services are classified as the resource category of ___________.

Capital

The tools, machinery, infrastructure, and knowledge used to produce good and services. Capital is sometimes divided into "physical" and "Human" capital. Physical refers to tangible items that are created to increase productivity; human capital refers to the knowledge and skills that people acquire in order to increase productivity.

Capital

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

Circular Flow Model

Possible but Inefficient

Combinations in the interior of the production possibilities frontier are:

A producer has a(n) __________ advantage in the production of a good or a service if his or her relative opportunity cost of production is lower than the opportunity cost of the other producers.

Comparative

If you are "relatively" better at something, you have a(n) _________ advantage.

Comparative

Specialization is based on ____________ advantage.

Comparative

______________advantage is the foundation for establishing the benefits of trade.

Comparative

if you are relatively at something , then you are sald to have a(n) ____________ advantage in that activity.

Comparative

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

Comparative Advantage

Being the lowest relative opportunity cost producer of a good.

Comparative Advantage Refers to:

The simple model of production assumes that the opportunity cost or production is _______.

Constant

When production is characterized by ________ opportunity cost, the resulting production possibilities frontier will be a straight line.

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

A characteristic of production such that the opportunity cost associated with increasing the production of one good or service, in terms of another, is constant at every level of production.

Constant Opportunity Costs

As the amount of an activity increases, its marginal _________ falls and its marginal ______ rises.

Cost

The more of a good or a service that is produced in a given period of time, the higher the marginal ________ that is associated with each additional unit.

Cost

The negative relationship between the marginal the marginal benefit associated with the use of a good or service and the quantity consumed; the more of a good or service is consumed, in a given period of time , the lower the marginal benefit associated with each additional unit.

Decreasing Marginal Benefit

Individuals and countries specialize because of ______ in opportunity cost

Differences

The quality of an _____________ model can be measured by how well it reflects reality and weather it gives us insights that can used in the real world.

Economic

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 ___________.

Efficient

___________________ ability is the talent or ability to combine land, labor, and capital t produce goods and services.

Entrepreneurial

The talent or ability to combine land, labor, and capital to produce goods and services. Entrepreneurial ability is different from human capital in that it primarily involves assuming risk and organizing resources into a productive process rather using resources in production.

Entrepreneurial Ability

When the marginal benefits equals the marginal cost, that stable level is an ________________ level.

Equilibrium

The marginal benefits equals the marginal cost.

Equilibrium Occurs When:

If we assume that people are self-interested, they will never do things that might make them worse off.

False

In the circular flow model, only by buying resources can _____ produce the output they will sell to household to generate revenue.

Firms

When resources are ________, increasing the production of one good causes a decrease in the production of the other.

Fixed

Less than the buyer's opportunity cost but greater than the seller's opportunity cost.

For two parties to be willing to trade, the terms of trade must be:

A useful way t visually represent the data in a production possibilities schedule is by means of a graph called production possibilities_________.

Frontier

The benefit, or wealth, that accrues to a buyer or seller as a result of trading one goods, service, or resource for another. The wealth, or additional well-being, created by trade does not have to be monetary.

Gain from trade

Comparing the level of consumption available before and after the trade.

Gain from trade can be measured by.

A Useful way to visually represent that data in a production possibilities schedule is by means of a _____ called a production possibilities frontier.

Graph

In the circular flow model, only by selling resources can _______ obtain the income they need to buy the products they want to consume.

Households

capital refers to the knowledge and skills that people acquire to increase productivity.

Human

A net gain to the economy.

If an activity if performed where the marginal benefits is greater that the marginal cost (MB>MC), there is :

-Factors of Production -Inputs

In economics, resource are also called:

Some resources are better suited for producing some good or service than others.

In the Real World, the opportunity cost increases as production increases, Because:

When resources are allocated in such a way that it is possible to increase the production of one good without decreasing the production of another, then the allocation of recourse is ____________.

Inefficient

Specialization causes individuals and nations to become _____________.

Interdependent

All physical and mental activity devoted to producing good and service.

Labor

All natural resources used in production; sometimes referred to as "Gift of Nature."

Land

resources sometimes referred to as "gift of nature" are classified as________.

Land

A law on economics that reflects the observation that since some resources are better suited to producing one good or service than another, as the production of a good or service increses, the opportunity cost of each additional unit rises.

Law of increasing Opportunity Cost

Energy is ____ scarce than wind energy.

Less

If the price is too ____, producers will not be eager to sell , but buyers will be willing and able to buy.

Low

Producing a good or a service at a _____ opportunity cost giving the producer a comparative advantage in the market.

Low

The study of the economy at the large-scale level, examining total output, the price level, and other aggregate measures of the economy.

Macroeconomics

The additional benefit associated with one more unit of an activity is the _______ benefit.

Marginal

The additional cost associated with one more unit of an activity is the _________ cost.

Marginal

The additional benefit associated with one more unit of an activity.

Marginal Benefit

The additional cost associated with one more unit of an activity.

Marginal Cost

The process of making choices in increments by evaluating the additional, or marginal, benefit against the additional, or marginal, cost of an action.

Marginal Decision Making

rational decision making is based on three assumptions.

Marginal Decision Making

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

Marginal Decision Making

Each row of the production possibilities schedule illustrates the ___________ amount of a good service that may be produced given the production of the other.

Maximum

The study of the economy at the small-scale level, examining individuals and specific markets.

Microeconomics

Decreasing marginal benefit describes the _________ relationship between the marginal benefit associated with the use of a good or a service and the quantity consumed.

Negative

Describes the trade-off resulting from the production of Good X in terms of Good Y.

On a production possibilities frontier (PPF) with good X on the horizontal axis and good Y on the vertical axis, we can say that the slope of the PPF ( In absolute value) equals the opportunity cost of production good X. This is true because the slope.

It is possible to operate outside the production possibilities frontier.

Only with trade:

The producer with the lowest relative _____________ cost as a comparative advantage and should specialize in the production of that good.

Opportunity

Is most plainly visible when spending on the thing means that less money can be spent on another thing.

Opportunity Cost

The value of the next-best forgone alternative; the value of the opportunity that you gave up when you chose one activity, or opportunity, instead of another. Opportunity cost exist because of scarcity.

Opportunity Cost

When spending more money on one thing means that you have less money to spend on something else, you have experiences ___________________________.

Opportunity Cost

the value of the opportunity that you give up when you choose one activity instead of another.

Opportunity Cost

When the marginal benefit equals the marginal cost, that stable level is an _________ level.

Optimal

The level of output where the marginal benefit of the last unit produced and consumed is equal to the marginal cost of that unit.

Optimal Level of Output

The idea that people make choices in order to maximize the overall benefit, or utility , of an action subject to its cost; people will engage in an activity as long as the marginal benefit of an activity is greater than or equal to its marginal cost.

Optimization

capital refers to tangible items that are created to increase productivity.

Physical

Increasing marginal cost describes the ___________ relationship between the marginal cost associated with the use of a good or a service and the quantity produced.

Positive

The circular flow model shows how household and firms interact in two key markets: the resource market and the ________ market.

Product

A table that shows the possible combinations of two different goods or services that can be produced with fixed resources and technology.

Production Possibilities Schedule

Each row of the ___________ ___________ schedule illustrates the maximum amount of a good or a service that can be produced given the production of the other.

Production Possiblities

The comparison of the scarcity of one good, service, or resource to that of another.

Relative Scarcity

Anything that is used to produce a good or service, whether it is provided by nature or is manufactured.

Resource

Anything that is used to produce a good or a service, whether it is provided by nature or is manufactured, is a(n) ___________.

Resources

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

Resources

How we choose to utilize the _________ that are available to us ultimately determines which goods and services get produced.

Resources

In the circular flow model, only by buying ____________ can firms produce the output they will sell to households to generate revenue.

Resources

When _______ are fixed, increasing the production of one good causes a decrease in the production of the other.

Resources

Because resources are ________, they must be allocated between competing uses.

Scarce

Economics is the study of how individuals and societies allocate__________ resources among many competing uses.

Scarce

A condition that results from the inability of limited resources to satisfy unlimited wants.

Scarcity

A major problem faced by developing countries is the relative ___________ of drinkable water as compared to water in general.

Scarcity

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

Scarcity

Means that resources are limited.

Scarcity

Interest is the idea that people choose to do the things that interest them.

Self

the idea that people choose to do the things that interest them is.

Self-Interest

The idea that people choose to do the things that interest them.

Self-interest

Rational Decision making

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

The practice of producing a single good or service rather than producing multiple goods or services.

Specialization

____________ causes individuals and nations to become independent.

Specialization

____________________ in trade cause individuals and nations to become interdependent.

Specialization

Law of increasing opportunity cost.

Suppose a farmer has three kinds of land for growing peaches; good, better, and best. As the farmer increases production, she will use that best land first, and costs will be low. At some point , she will run out of the best land and will have to start using the better land, and cost will be a little higher. this describes the:

The price of one good, service, or resource in term of another.

Terms of trade

Gain from trade.

The benefit, or wealth, that accrues to a buyer or a seller as a result of trading one good, service, or resource for another is the:

If the demand for the good or service you produce decreases, its price and your income will decrease too.

The haem in specializing is that

Self-Interest

The idea that people choose to do the things that interest them is:

Total benefits as the level of the activity increases by one unit.

The marginal benefit of an activity can be found by calculating the change in:

Differences in available resources and technology

The opportunity cost of producing a good for one producer may be different from that of another because of:

The marginal benefit equals the total cost.

The optimal level of economic activity occurs when:

Does not have to be monetary.

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

Comparative advantage is the foundation for establishing the benefits of ______.

Trade

Assuming that people are self-interested recognizes that people will make mistakes.

True

The quality of an economic model can be measured by how well it reflects reality and whether it gives us insights that can used in the real world.

True

He or She will be able to sell at a lower price than other producers.

When a producer has a low opportunity cost, that producer has an advantage in the market because.

Constant Opportunity Cost

When the opportunity cost associated with increasing the production of one good or service in term of another is constant at every level of production, There is;

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:

The terms associated with the trade.

Whether a good or a service will be traded depends largely on :

Combinations _________ the production possibilities frontier are possible but inefficient with the current resources and technology.

Within