ECON 2105 Macroeconomics module 1
The comparison of the scarcity of one good, service, or resource to that of another is called
"relative scarcity."
Martin has given himself an entertainment budget of $5 per week. He has decided that each week he will spend that $5 by either attending a matinee movie at his local theater or downloading five songs by one of his favorite artists. What is the non-monetary opportunity cost of seeing a movie this week?
Five songs
According to the circular flow, which two groups interact with each other in the product market?
Households and firms
is/are also called factors of production since they are transformed into output during the production process.
Resources
combinations lying __ the production possibilities frontier are impossible to produce with the current resources and technology.
beyond
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 producing Good X with respect to the production of Good Y. This is true because the slope:
describes the trade-off resulting from the production of Good X in terms of Good Y.
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 institutions make decisions in a world of scarce resources.
economics
In the circular flow model,- ______must buy resources in order to produce the output they will sell to households.
firms
When resources are ______ , increasing the production of one good causes a decrease in the production of the other.
fixed
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
inefficiently
Economics is the study of how individuals and societies allocate ______ resources among many competing uses.
limited
When the opportunity cost associated with increasing the production of one good or service in terms of another is constant at every level of production, then the production possibility frontier is:
linear.
The study of ______ deals with how the whole economy can be affected by important national and global events - such as wars
macroeconomics
Consider a production possibilities frontier (PPF) with Good X on the horizontal axis and Good Y on the vertical axis. The slope of the PPF tells us the _____ of producing one additional unit of Good X.
opportunity cost
The value of the next-best forgone alternative is the
opportunity cost
Tools - machinery - and infrastructure are classified under the resource category of
physical capital
Money spent by a firm on machinery that is designed to improve future productivity is called:
physical capital.
In the circular flow model, the two markets are the factor market and the:
product market.
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
A graph that shows the possible combinations of two different goods or services that can be produced with fixed resources and technology is the:
production possibilities frontier.
The function of firms in the circular flow model is to _____ resources and _____ products.
purchase; sell
Tomatoes represent a small subset of food, so tomatoes are:
relatively more scarce than food in general.
According to the circular flow diagram, a household receives a wage for supplying labor to a firm in the ____ market
resource
The circular flow model shows how households and firms interact in two key markets: the _____ market and the
resource, product
Because the world is characterized by scarcity, people must allocate the limited ______ at their disposal among many competing uses.
resources
Every person's and every economy's standard of living relies on the effective use of
resources
In the circular flow model, households can obtain the income they need to buy the products they want to consume only by selling their (one word)_____- also known as factors of production.
resources
A major problem faced by developing countries is the relative_____of drinkable water as compared to water in general.
scarcity
means that resources are limited.
scarcity
A strong economic model allows us to analyze the economic events of the world by:
simplifying a very complex economic world.
When production is characterized by constant opportunity costs, the resulting production possibilities frontier will be a __ line.
straight
Opportunity cost is:
the value of the opportunity that you give up when you choose one activity instead of another.
Because resources are scarce
they must be allocated between competing uses