Econ - Macro

____ a nation's production possibilities frontier represents economic growth

an outward shift of

The production possibilities frontier model assumes all of the following except

any level of the two product that the economy produces in currently possible

What is the circular-flow diagram and what does it illustrate?

the circular-flow diagram shows how households and firm are linked through product and factor markets

Lionel's Lawn Care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, and he charges $25 for this service. For total price of $40, Lionel will also trim shrubs, a service that adds an additional $10 to the total cost of the standard package. What is Lionel's marginal benefit if he sells the standard package?

$25

Trade-offs force society to make choices, particularly when answering the question three fundamental questions:

1. what goods and services will be produced? 2. how will the goods and services be produced? 3. who will receive the goods and services produced?

The Stogie Shop, a cigar store in the mall, sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each. What is the opportunity cost of buying a hand-rolled cigar

4 machine made cigars

Societies organize their economies in two main was to answer the three questions of what, how and who. A society can have a __________ economy in which the government decides how economic resources will be allocated. Or a society can have __________ economy in which the decisions of households and firms interacting in markets allocate economic resources.

Centrally Planned Market

what is the basis for trade?

Comparative advantage

economics promotes which of the following as the way to make the best decision

Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost

The fair distribution of economic benefits

Equity

one of the great benefits of trade is

It makes it possible for society to become better off by increasing both its production and consumption

Firms choose how to produce the goods and services they sell. In many cases, firms face a trade-off between using more workers or using more machines. For example,

Many times in the past several decades, firms may have chosen between a production method in the United States that uses fewer workers and more machines and a production method in China that uses more workers and fewer machines

The principle of _____ is that the economic cost of using a factor of production is the alternative use of that factor that is given up

Opportunity cost

the primary difference between product markets and factor markets is that

Product markets are markets for goods, while factor markets are markets fro factors of production-labor, capital, natural resources, and entrepreneurial ability

Opportunity cost is

The highest value alternative that must be given up to engage in an activity

property rights are

The rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it

do you agree with Baum that the economic system in Oz wouldn't work in the contemporary United States?

The system in Oz wouldn't work. The wants of people in the united states exceed the resources available to fulfill those wants

which of the following is a macroeconomics question

What determines the unemployment rate?

Microsoft charges a price of $599 for a copy of Windows 7. Is this pricing decision rational?

When we assume the managers at Microsoft have used all available information and have weighted all known benefits and costs, we are assuming rationality

how should policymakers determine the amount of money that should be allocated for research curing heart disease?

Whether the last dollar devoted to research on heat disease results in more benefit than the last dollar spent on research for curing other diseases

which of the following statements is true

a curved line has slope values that change at every point

the term "market" in economics refers to

a group of buyers and sellers of a product and the arrangement by which they come together to trade

product market

a market for goods-such as computer-or services-such as medical treatment

factor market

a market for the factors of production, such as labor, capital, natural resources, and entrepreneurial ability

the primary difference between absolute and comparative advantage is

absolute advantage refers to the ability to produce more of a good or service using the same amount of resources and comparative advantage refers to the ability to produce a good or service at a lower opportunity cost

A market is a group of ---- and ------ of a good or service and the institution or arrangement by which they come together or trade

buyers and sellers

An economy in which the government decides how economic resources will be allocated

centrally planned economy

economics is the study of the ______ people make to attain their goals, given their ______ resources

choices and scarce

the basis for trade is ___ advantage

comparative

When smartphones based on the Android operating system were first introduced, there were relatively few applications, or "apps," available for them. Now, there are many more "apps" available for Android-based smartphones. Smartphones and "apps" for smartphones are clearly ____

complements

From the list below, select the variable that will cause the demand curve to shift

consumer income

___ decide(s) what goods and services will be produced

consumers, firms, and government

a ____ is someone who operates a business, bringing together the factors of production-labor, capital, and natural resources-to produce goods and services

entrepreneur

Tesla increases employment at its Fremont plant this take place in the ___ market

factor

george sells land he owns to mcdonald's so it can build a new restaurant this takes place in the ___ market

factor

george works 20 hours per week at mcdonal's this takes place in the ___ market

factor

in economic terminology, the inputs used to make goods and services are referred to as

factors of production

households purchase what

final goods and services in the product market

if country ABC can produce a unit of good 1 with fewer resources than can country XYZ, it is correct to say that country ABC

has an absolute advantage in producing good 1

In the United States, who receives the goods and services produced depends largely on __________

how income is distributed

the production possibilities frontier will shift outward

if technological advances occur

what does increasing marginal opportunity costs mean?

increasing the production of a good requires larger and larger decreases in the production of another good

inefficient points =

inside

Economics

is the study of the choices people make to attain their goals, given their scarce resources

is the study of the economy as a whole, including topics such as inflation, unemployment, and economic growth

marco

Economists use the word 'marginal' to mean an extra or additional benefit or cost of a decision. An optimal decision occurs when

marginal benefit equals marginal cost

An economy in which the decisions of households and firms interacting in markets allocate economic resources

market economy

___ is the study of how households and firms make choice, how they interact in markets, and how the government attempts to influence their choices

micro

An economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources

mixed economy

which of the following is not scarce according to the economic definition?

none of the above

The slope of a production frontier measures the ____ of producing one more unit of a good

opportunity cost

economics assume that

optimal decisions are made at the margin

unattainable points=

outside

in economics, the term capital refers to

physical capital, such as machinery, that is used to produce other goods

which of the following statements is true about a simple circular flow model

producers are buyers in the factors market

every society faces economic trade - offs. this means

producing more of the one good means less of another good can be produced

george buys a Tesla Model S this takes place in the ___ market

product

The situation in which a good or service is produced at the lowest possible cost

productive efficiency

_________ occurs when a good or service is produces at the lowest possible cost

productive efficiency

One of the basic facts of life is that people must make choices as they try to attain their goals. This unavoidable fact comes from a reality an economist calls

scarcity

situation in which unlimited wants exceed the limited resources available to fulfill those wants

scarcity

A critical function of the government in facilitating the operation of a market economy a

setting up and enforcing private property rights

Increasing opportunity cost along a bowed out production frontier occurs because

some factors of production are not equally suited to producing both goods or services

the household ___ the factor of production and the firm ___ the factor of production

supplies; demands

the household ___ the labor and the firm ___ the labor

supplies; demands

the households ___ the labor and the firm ___ the labor

supply; demands

comparative advantage means

the ability to produce a good or service at a lower opportunity cost than any other producer

what is comparative advantage?

the ability to produce a good or service at a lower opportunity cost than other producers

what is absolute advantage?

the ability to produce more of a good or service than competitors using the same amount of resources

opportunity cost is defined as

the highest valued alternative that must be given up to engage in an activity

a production possibilities frontier (PPF) is

the maximum attainable combinations of two goos that may be produced with available resources

When the federal government crafts environmental policies that make it less expensive for firms to follow green initiatives,

the policies are consistent with economic incentives

what are the implications of this idea for the shape of he production possibilities frontier?

the production possibilities frontier will be bowed outward

can these two countries gain from oil and olive oil?

these countries cannot gain from trade because neither has a comparative advantage producing either good

scarce =

time, coal, capital, health services

it is not possible to have an absolute advantage in producing a good or service without having a comparative advantage

true

the distinction between a normal and an inferior good is

when income increases, demand for a normal good increases while demand for an inferior good falls

suppose you win free tickets to a movie plus all you can eat at the snack bar for free. would here be a cost to you to attend this movie?

yes because the movie's opportunity cost is equal to the highest-valued alternative that must be given up to attend the movie

An outward shift of a nation's production possibilities frontier can occur due to

an increase in the labor force

how can a country gain from specialization and trade?

A country can specialize in producing that for which it has a comparative advantage and then trade for other needed goods and services.

what does the term "marginal" mean in economics

an additional or extra

You observe that when the price of UGG boots increases the demand for Kindle tablet readers remains the same. UGG boots and Kindle tablet readers are considered to be ______ goods

unrelated

which of the following generates allocative efficiency in a market economy

voluntary exchange between buyers and sellers

suppose the president is attempting to decide whether the federal government should spend more on research to find a cure for heart disease. what is the opportunity cost of spending more money to find a cure for heart disease?

the reduction in funding for research to cure other diseases

a free market exists

when the government places few restrictions on how goods and services can be produced or sold or on how factors of production can be employed

Choco Fantasy is a firm that produces both dark chocolates as well as liquor chocolates. It can produce 10,000 bars of dark chocolate per month if all its resources are used to produce only this variety. Similarly, using all its resources in the production of liquor chocolates, the firm can produce 8,000 bars per month. However, during a given month, the firm produces both varieties. which of the following, if true, would suggest that the firm is operating on its PPF?

Even though the demand of both liquor and dark chocolates has increased, the company can increase the production of only one variety.

A __________ economy is an economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources

Mixed

evaluate the following argument; "Adam Smith's analysis is based on a fundamental flaw: He assumes that people are motivated by self-interest. But this isn't true. I'm not selfish, and most people I know aren't selfish."

This statement is based on the misconception that following your self-interest and being selfish are the same thing

an example of a factor of production is

a worker hired by an auto manufacturer

an example of a factor of production is

a worker hired by an q

in general, the term "ceteris paribus" means

all else equal

A state of the economy in which production is in accordance with consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it

allocative efficiency

__________ occurs when production is in accordance with customer preferences

allocative efficiency

the household ___ the goods and the firm ___ the good

demand; supplies

suppose that to move more people off the wait list for organ donations, surgeons and hospitals are developing a market for organ swapping. this is an example of a macroeconomics topic

false

what do economists mean by scarcity?

when unlimited wants exceed limited resources

is it possible for a country to have a comparative advantage in producing a good without also having an absolute advantage? A country without an absolute advantage in producing a good

will have a comparative advantage if it has a lower opportunity cost of producing that good