micro ch 1&2

Three examples that are NOT a macroeconomic primary goal

1. eliminating political conflict 2. help set the optimal price for a pound of peaches at the local grocery store. 3. calculate how much urban residents are willing to pay to protect biodiversity.

Three examples that are a macroeconomic primary goal

1. low unemployment 2. low inflation 3.growth in standard of living

Which statement describes the equity-efficiency trade‑off?

Actions intended to make economic outcomes fairer may cause efficiency to decrease.

Taiwan is a small mountainous island with 23 million inhabitants, little arable land, and few natural resources, while Nigeria is a much larger country with 8 times the population, 40 times more arable land, and tremendous deposits of oil. Given Nigeria's sizable resource advantage, why is Nigeria's total annual production less than that of Taiwan's?

Although Nigeria has significantly more natural resources and labor (two important factors of production) than Taiwan, these resources alone do not guarantee a higher ability to produce goods and services. Factors of production also include physical capital (machinery), human capital (education), and technology (research and development), all of which Taiwan has in great abundance. Thus, despite the lack of land, labor, and natural resources, Taiwan is able to use its resources efficiently and expand its production possibilities well beyond those of Nigeria.

What helps businesses produce

Capital equipment

Outward shift of a PPF means..

Economic Growth

PPF shifts to the right as an economy grows as a result of:

Expanding resources and improving technologies

The resource category capital refers to financial assets, such as bank accounts, bonds, certificates of deposits, and stocks. T or F

False

Why do Hollywood stars (and many other rich individuals)—unlike most people—have full-time personal assistants who manage their personal affairs?

For Hollywood stars and other rich people, the opportunity cost of their time is high. As a result, they hire people at lower cost to do the mundane chores that each of us is accustomed to doing because our time is relatively less valuable. Specializing in one's comparative advantage is a way to maximize utility when time is limited.

Production efficiency

Goods and services are produced at their lowest possible resource cost.

Allocative efficiency

Goods are produced according to what society desires.

What is an example of a normative question

How should a society achieve full employment

Why, if at all, is the ceteris paribus condition important in economic analysis?

It allows the analysis of how a single change affects an economic environment.

.As a result of a severe recession, the total output, or gross domestic product, of a nation falls by 4%

Macroeconomics

Have the millions of dollars people have spent on video games worldwide affected the gross domestic product in their respective countries

Macroeconomics

Increased consumer spending causes the national unemployment rate to fall

Macroeconomics

A tax on tires increases the price of tires paid by car owners

Microeconomics

How does ultravision choose to market "Call of Obligation"?

Microeconomics

How much will ultravision charge for "Call of Obligation"?

Microeconomics

Optimism about future car sales leads General Motors to hire more auto workers.

Microeconomics

Robotic technology reduces the demand for auto workers.

Microeconomics

How much will ultravision pay the developers of the game

Miroeconmoics

If a new health care policy can benefit some citizens without making anyone worse off, then it is achieving

Pareto efficiency

An example of something categorized as microeconomics is

Potato farmers experience record harvest; Potato Prices Plummet

A society that is able to produce goods and services at the lowest possible cost is experiencing...

Production Efficiency

A common definition of economics is that it is the study of :

The allocation of scarce resources to satisfy competing wants

How will a recession affect a county's PPF?

The country will produce at a point below an unchanged PPF.

Which is NOT an example of a behavior exhibited in a market economy?

The president of the European country of Semolina decrees that pasta must be consumed at all meals in an effort to help domestic pasta makers.

The resource category entrepreneurial ability refers to business skills such as the management of resources, the drive to innovate, and the willingness to bear risk. T or F

True

The resource category land refers to all natural resources, including fertile land, forests, mineral deposits, solar and wind energy, and water. T or F

True

The one element that really seems to differentiate entrepreneurship from the other resources is the fact that entrepreneurs shoulder the risk of the failure of the enterprise. Is this important? Explain.

Typically, entrepreneurs put not only their time and effort into a business but also their money, often pledging private assets as collateral for loans. Should the business fail, they stand to lose more than their jobs, rent from the land, or interest on capital loaned to the firm. Workers can get other jobs, landowners can rent to others, and capital can be used in other enterprises. The entrepreneur must suffer the loss of personal assets and move on.

every economy must decide ...

What to produce. How to produce it. Who will receive the goods and services produced.

National governments use fiscal and monetary policies to..

achieve macroeconomic goals such as promoting employment, fighting inflation, and enhancing economic growth.

Which of the following is not a defining characteristic of market economies? a.Consumers and producers respond to prices b.The government owns the resources used for production c.The government protects property rights and enforces contracts d.Competition between buyers and sellers leads to efficient production

b.The government owns the resources used for production

which of these are least likely to contribute to the wealth of a nation? a. Having a legal system to enforce contracts b.Preserving incentives to work c. Encouraging people to develop a range of skills rather than to specialize is one area d. Encouraging human creativity by providing a strong educational system and reward for innovation

c

market decision making means

considering a little more or a little less than what we already have. We decide by using marginal analysis, which means comparing the costs and benefits of a little more or a little less.

Which of these is considered physical capital? a. Water used for agricultural irrigation b. Money invested in a start up business for space tourism c. An entrepreneur vision of how to reach a large number of customers through social media d. A forklift used in a distribution center for an online retailer

d. A forklift used in a distribution center for an online retailer

comparative advantage

exists when one country can produce a good at a lower opportunity cost than another country.

absolute advantage

exists when one country can produce more of a good than another country using the same amount of resources.

positive economics

focuses on facts and cause-and-effect relationships

During the summer, the largest computer game retailer has a massive sale. As prices for computer games fall, consumers purchase more games, ceteris paribus.What does the term ceteris paribus mean in this context?

holding all else equal (unchanged)

Increased consumer spending causes the rate of inflation to rise.

macroeconomics

Opportunity cost

measures the value of the next best alternative use of your time or money, or what you give up when you make an economic decision.

Determine if the items represent an example of positive economics or normative economics. Social welfare spending in Sweden occupies too large a portion of the national budget.

normative economics

Determine if the items represent an example of positive economics or normative economics. The richest 11% of Americans should pay more taxes than the rest of the 99%.

normative economics

Should student loan debt be forgiven for students who earn less than $50,000 per year? Is an example of a

normative question

Ceteris Paribus

other things being equal

Determine if the items represent an example of positive economics or normative economics. As minimum wage increases, the prices of all goods and services also tends to increase.

positive economics

Determine if the items represent an example of positive economics or normative economics. A decrease in the supply of coconut will increase the price of German chocolate cake, a good which requires coconut shavings as a key ingredient.

positive economics

Some cities require property developers to set aside some apartments for low income tenants who pay reduced rent. This policy:

promotes equity while diminishing incentives for people to earn a life supporting income

What does land include?

resources below and above the land

People have limited resources.

scarcity

Physical capital is

the factories and machinery used to produce other goods and services.

The phenomenon of markets being able to create efficient outcomes through individual incentives is known as:

the invisible hand

What is a microeconomic topic?

the study of the business cycle

Everything you do requires giving up something (time, money, etc.).

tradeoffs

The resource category labor refers to the mental and physical productivity of workers. T or F

true