Economics Test 1
Centeris Paribus
All other things remaining constant or equal
Problem of economic scarcity applies to
All systems in all nations regardless of the level of development
The more society consumes today
The less society can consume in the future
Unemployment rate and inflation is a study of
Macroeconomics
Aggregate also means
Total
Shift from D to D1 can be a result of
A change in the quantity demanded
Pizza is a normal good, shift in demand from D to D2 can be a result of
A decrease in income
Movement from point A - B reflects
A decrease in the price of pizza
Way that society uses to allocate resources to satisfy human wants is called
An economic system
Fundamental aspect of economics
Analyze how choices are made
Economic models
Are used to explain how people behave
Macroeconomics
Behavior of economy as a whole
People respond to incentives
By calculating their individual costs and benefits and determining which is greater
Graphical representation which shows trade offs that occur
Production possibilities curve
One opportunity cost associated with going to college is
Giving up employment possibilities while in college
Economics deals with
How individuals allocate scarce resources resources to satisfy unlimited human wants
Law of supply states
If price increases, quantity supplied increases
Scarcity
Inability of society to satisfy all human wants because of limited resources
Potential rewards that are available if a particular activity is undertaken
Incentives
Micro-economist would study all the following except
Income tax change on the nations unemployment rate
Shift from D to D2 can be a result of
Increase in the price of soda, a complement to pizza
An increase in the number of fast food restaurants
Increases the supply of fast food meals
When studying individual behavior, economists assume that
Individuals act as if they were rational
All points inside PPC indicate
Inefficient production
Shape of production possibilities curve
Production of both corn and cloth is characterized by increasing costs
One reason why economists often use models is that
I️t helps us understand, explain and predict the world economy
Which of the following are considered factors of production?
Land, labor, physical capital and entrepreneurship
The basic economic problem is a situation of
Limited resources and unlimited wants
Economics is described as people using
Limited resources to satisfy unlimited wants
Individual choice about what type of computer to buy is a subject of
Microeconomics
Increase in the quantity demanded is shown as a
Movement along the demand curve
Conversion of resources into consumer goods is called
Production
Five cent deposit on beer bottles
Provides a positive incentive to recycle
Which of the following increases the supply of gasoline
Resource used to produce gasoline such as crude oil
Items used to produce goods and services
Resources
Point on PPC curve indicates
Resources are being used efficiently
In economics
Resources are limited, wants are unlimited
Economists assume people are motivated by
Self interest
Whenever productive resources we used to make capital goods
Society is giving up current consumption
Microeconomics
Studies individual decision making by households and firms
Point outside the PPC indicates
That is currently not available
When a society forgoes current consumption to invest in capital goods
That society can consume more in future
The price of cotton falls, as a result
The quantity demanded of cotton clothing increases
Opportunity cost is
The value of the next best alternative that must be sacrificed to satisfy a want
The issues that an economic system attempts to solve include
What to produce, how, and who (all the above)
