Macro Economics

Substitutes (smart phone vs Tablet)

-The more you buy of one, the less you will buy of the other -A decrease in the price causes the demand curve for a good to shift to the left

Complements (hotdogs vs buns)

Goods and services that are used together -A decrease in price will cause the demand curve for a good to shift right

An increase in the price of the good will

NOT shift the demand curve for a good

Marginal revenue

Office supply store sells printer paper at a fixed cost of 4.50. Which of the following is a term used by economists to describe the money received from the sale of an additional ream of paper?

Raising the price of alcohol, or banning alcohol on campus, decrease the number of students who use marijuana

The two goods are complements in consumption

Inferior good

When the demand for the good decreases following a rise in income and increase following a fall in income.

Normal good

When the demand for the good increases following a rise in income and decreases following a fall in income

The phrase "demand has increased" means

a demand curve has shifted to the right

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

An increase in the price of MP3 players will result in

a larger quantity of MP3 players supplied

Marginal (in economics)

an addition or extra

The attainable production points on a PPCurve

are the points along and inside the PPF

A curved line has slope values that

change at every point

If the price of propane was to decrease

demand for propane would increase

Often a trade- off between

economic efficiency and economic equity

An outward shift of a nation's PPF represents

economic growth

The Law of demand implies

holding everything else constant, that as the price of yogurt increases, the quantity of yogurt demanded will decrease

A Production Possibilities Frontier with a bowed outward shape indicates

increasing opportunity costs as more and more of one good is produced

Marginal analysis

involves undertaking an activity until its marginal benefits equal marginal costs

If the PPF is linear, then

opportunity costs are constant as more of one good is produced

Economists assume that

optimal decisions are made at the margin

Economists assume that rational people

respond to economic incentives

Increasing opportunity cost along a bowed out PPF occurs because

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

An increase in income leads to an increase in the demand for sushi

sushi is a normal good

The PPF model does not assume

that any level of the two products that the economy produces is currently possible

The principle of opportunity cost is

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

Comparative advantage means

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

Opportunity cost

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

Production Possibilities Frontier shows

the maximum attainable combinations of two products that may be produced in a particular time period with available resources

Increasing marginal opportunity cost implies that

the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts

Economics

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

If in the market for apples the supply has decreased then

the supply curve for apples has shifted to the left

Scarcity refers to the situation in which

unlimited wants exceed limited resources