Exam #1
The branch of economics which studies how households and firms make choices, interact in markets, and how government attempts to influence their choices is called...
Microeconomics
What is considered to be intellectual property?
Software, films, books
True or False: A curved line has slope values that change at every point
True
True or False: All economic questions arise from the fact that resources are scarce
True
True or False: An example of a macroeconomics topic is examining the conditions that could lead to economic growth
True
True or False: An increase in the unemployment rate may be represented as a movement from a point on the production possibilities frontier to a point inside the frontier
True
True or False: If prices rise on average in the US, the purchasing power of the dollar declines
True
True or False: In a centrally planned economy, the government decides how economic resources will be allocated
True
True or False: In a free market there are virtually no restrictions, or at best few restrictions, on how a good or service can be produced or sold
True
True or False: On a diagram of a production possibilities frontier, economics decline (negative growth) is represented by the production possibilities frontier shifting inward
True
True or False: If additional units of a good are produced at at an increasing opportunity cost, the production possibilities frontier would be bowed outward
Trye
Scarcity
Unlimited wants exceed limited resources
Trade-offs force society to make choices when answering what three fundamental questions?
What goods and services to produce; how will these goods and services be produced; who receives them?
It is necessary for all economic systems to provide people with goods and services and also restrict them from getting as much of these as they want because failure to do this could ___ the efficiency of the system by producing some goods and services that are ___.
reduce; not as highly valued
Two-dimensional graphs have a horizontal and vertical axis used in economics to illustrate...
relationships between economic variables
The Production Possibilities Frontier Model...
shows that is all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good
Increasing opportunity cost along a bowed-out production possibilities frontier occurs because
some factors of production are not equally suited to producing both goods or services
Who, in a modern mixed economy, decides what goods and services will be produced with the scarce resources available in that economy?
the government, consumers, and producers
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
GDP understates the total production of final goods and services because of the omission of
the underground economy
Depreciation is
the value of worn out equipment, machinery, and buildings
What does the Bureau of Economic Analysis (BEA) do?
values goods and services at their market prices, multiplies them by the quantity produced, and adds them up
In a market economy, who decides what goods and services will be produced?
Consumers and Producers
True or False: An increase in population shifts the production possibilities frontier inwards over time
False
True or False: Consumers make all economic decisions in a mixed economy
False
True or False: GDP is a measure of well being
False
True or False: When voluntary exchange takes place only one party gains from the exchange
False
If prices are rising on average, then...
real GDP will be greater than nominal GDP in the years before the base year
GDP Deflator Formula
((new - old) / old) x 100%
How much of GDP is made up of consumption?
70%
All _______ economies have been political dictatorships
Centrally Planned
If opportunity costs are ___, the production possibilities frontier would be graphed as a negatively sloped straight line
Constant
What is something that an entrepreneur does?
Develop the vision for the firm and funds the producing unit
What does an entrepreneur do?
Develops the vision for the firm and funds the producing unit
Personal Income
National Income - Retained Earnings + Transfer Payments + Interest on Govt Bonds
According to the Centers for Disease Control and Prevention, how many states were there in 2013 with less than 20% of the population being obese?
No states
Nominal GDP Formula
Price x Quantity, add all together
When you purchase a new surfboard you do so in the
Product market
Mrs. Lovejoy decides to invest in companies which she believes are producing its goods at the lowest possible cost. Mrs. Lovejoy is investing in companies that are...
Productively efficient
What contributed to the downfall of the Soviet Union in 1991?
Public dissatisfaction with low living standards and political repression
Macroeconomics
The branch of economics which studies the behavior of entire economies and policies that affect the economy as a whole
What two factors are represented by the same circular flow model?
The flow of costs and the flow of revenue
Opportunity Cost
The highest valued alternative that must be given up to engage in an activity
What would increase disposable personal income?
a decrease in taxes paid
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.
The cost incurred from the production of an additional unit of a product is...
a marginal cost to the firm
If a graph has a line that shows the quantity of flat screen TVs sold in the last five years, it is known as...
a time-series graph
Positive analysis uses ___ to estimate the costs and benefits of different courses of action
an economic model
In the desire to have a celebrity's image protected to prevent it from being used in ways he would not approve, a celebrity's estate...
can rely on US laws that protect intellectual property rights to prevent the unauthorized use of his image
To calculate GDP by the expenditure method one must add...
consumption, investment, government, and net exports
There is often a trade off between...
economic efficiency and economic equity
Who receives the goods and services produced in the United States depends largely on...
how income is distributed
When a celebrity has the desire to have his image protected following his death, this is best described as an example of the protection of
intellectual property
A final good is one that
is purchased by its final user
Competition forces firms to produce and sell products as long as the ___ to consumers exceeds the ___ of production
marginal benefit; marginal cost
Voluntary exchange increases economic efficiency because...
neither the buyer nor the seller would agree to trade unless they both benefit
Once the copyright expires...
no publisher can claim copyright of that authors work, but the book can be reissued by any publisher
An ___ shift of a nations PPF represents economic growth
outward
If nominal GDP rises we can say that
production has risen or prices have risen or both have risen
