chapter 1

Scarcity

Lack of enough Resources to satisfy all desired uses of those resources

In a capitalist economy, the distribution of most goods is determined by

individual desires and profit-seeking firms.

If one country has a comparative advantage over another, this means:

it can produce one product at a lower opportunity cost than the oth

Land as a resource would include all of these EXCEPT

tractors used on farms

What phrase did Adam Smith use in his book, "The Wealth of Nations", to describe the way individuals pursuing their self-interest can promote the interests of the overall society?

the invisable hand

Opportunity Cost

the most desirable alternative given up as the result of a decision

(Figure: Production Possibilities Frontier) The figure shows a production possibilities frontier for backpacks and tablets. What is true of an economy choosing to produce at point b?

the resources of this economy are fully employed in producin

Production Possibilities

(Frontier) shows all the possible combinations of goods and services

(Figure: Slope of a Line)The figure shows the relationship between the size of a video file in megabytes and the download time in minutes. What is the slope of the line?

.02

Figure: GDP Per Capita) The figure shows 2006 GDP per capita for selected countries, and the country's corresponding years of life expectancy at birth for both men and women. Russia's GDP per capita is roughly what percent of America's?

15

Entrepreneurship

The assembling of resources to produce new or improved products and technologies

Economics

The study of how to meet unlimited, competing wants with limited resources

Producing the right mix of products for society is known as what?

allocative efficiency

Which of these does NOTimprove our standard of living?

an increase in the price level

Making a trade-off at the margin means:

comparing the costs and benefits of doing a little bit more of s

Two countries will benefit from trading with one another if:

each country concentrates on producing those goods for which it ha

In the long run, which economic policy is most likely to shift the production possibilities frontier (PPF) outward?

encouraging more investment in human capital

Capital

final goods produced for use in the production of other goods, equipment, structures.

(Figure: GDP Per Capita) The following figure shows 2006 GDP per capita for selected countries, and the country's corresponding years of life expectancy at birth for both men and women. In this figure, which country has the highest life expectancy for males/females?

japan/japan

(Figure: Production Possibilities Frontier) The igure shows a production possibilities frontier (PPF) for microwave popcorn and microcomputers. If an economy permits more immigration and invests in its school system, we would expect its PPF curve (PPF0) in the figure to:

shifts out away from the orgin to pp2

Which of these is NOT a form of capital used as a factor of production?

stock certificates

Which of these is NOT a payment for a factor of production?

taxes