ECN 201 (Fundamentals)

Human

capital refers to the knowledge and skills that people acquire to increase productivity.

Opportunity Cost

the value of the opportunity that you give up when you choose one activity instead of another.

Marginal Decision Making

rational decision making is based on three assumptions.

-Unlimited
-Limited

the term "scarcity" describes the fact that people’s____________ wants cannot be completely satisfied with __________ resources.

Marginal Decision Making

when you decide after studying for three hours that another hour of sleep is more beneficial to you that a fourth hour of studying, you are engaging in:

Land

resources sometimes referred to as "gift of nature" are classified as________.

Physical

capital refers to tangible items that are created to increase productivity.

Self-Interest

the idea that people choose to do the things that interest them is.

Allocated

Because resources are scarce, they must be ______________ between competing uses.

Capital

The tools, machinery, infrastructure, and knowledge used to produce good and services are classified as the resource category of ___________.

-Physical
-Human

Capital is sometime divided into two categories: _________ capital and __________ capital.

The marginal benefit of an activity can be found by calculating the change in:

Total benefits as the level of the activity increases by one unit.

The optimal level of economic activity occurs when:

The marginal benefit equals the total cost.

Positive

Increasing marginal cost describes the ___________ relationship between the marginal cost associated with the use of a good or a service and the quantity produced.

True

Assuming that people are self-interested recognizes that people will make mistakes.

Self

Interest is the idea that people choose to do the things that interest them.

Scarcity

Means that resources are limited.

Scarcity

Due to the ________ of natural resources, we cannot have all the housing and all the forests we may want.

Equilibrium Occurs When:

The marginal benefits equals the marginal cost.

Optimal

When the marginal benefit equals the marginal cost, that stable level is an _________ level.

Marginal

The additional benefit associated with one more unit of an activity is the _______ benefit.

The marginal benefit of an activity can be found by calculating the change in:

Total benefits as the level of the activity increases by one unit.

False

If we assume that people are self-interested, they will never do things that might make them worse off.

True

Assuming that people are self-interested recognizes that people will make mistakes.

Benefit

the more of a good or a service that is consumed in a given period of time, the lower the marginal________ that is associated with each additional unit.

Cost

The more of a good or a service that is produced in a given period of time, the higher the marginal ________ that is associated with each additional unit.

Benefit / Cost

When that marginal _______ equals the marginal ______, there is no incentive to either increase or decrease the level of the activity performed.

Equilibrium

When the marginal benefits equals the marginal cost, that stable level is an ________________ level.

Opportunity Cost

When spending more money on one thing means that you have less money to spend on something else, you have experiences ___________________________.

Economic

The quality of an _____________ model can be measured by how well it reflects reality and weather it gives us insights that can used in the real world.

Cost

As the amount of an activity increases, its marginal _________ falls and its marginal ______ rises.

Resources

How we choose to utilize the _________ that are available to us ultimately determines which goods and services get produced.

Resources

Because the world is characterized by scarcity, people must allocate the limited ________ at their disposal among many competing uses.

Scarce

Economics is the study of how individuals and societies allocate__________ resources among many competing uses.

True

The quality of an economic model can be measured by how well it reflects reality and whether it gives us insights that can used in the real world.

Resources

Anything that is used to produce a good or a service, whether it is provided by nature or is manufactured, is a(n) ___________.

A table that shows the possible combinations of two different goods or service that can be produced with fixed resources and technology is the:

Production Possibilities Schedule

Resources

When _______ are fixed, increasing the production of one good causes a decrease in the production of the other.

Combinations in the interior of the production possibilities frontier are:

Possible but Inefficient

Allocation

The process of assigning a good, a service , or a resource to one use instead of another describes "___________".

Scarce

Because resources are ________, they must be allocated between competing uses.

Scarcity

A major problem faced by developing countries is the relative ___________ of drinkable water as compared to water in general.

Allocate

Because the world is characterized by scarcity, people must _________ the resources at their disposal to many competing uses.

Within

Combinations _________ the production possibilities frontier are possible but inefficient with the current resources and technology.

Self-interest, marginal decision making, and optimization form the basis for:

Rational Decision making

Marginal

The additional cost associated with one more unit of an activity is the _________ cost.

Additional

The ___________ cost associated with one more unit of an activity is the marginal cost.

Maximum

Each row of the production possibilities schedule illustrates the ___________ amount of a good service that may be produced given the production of the other.

A table that shows the possible combinations of two different goods or services that can be produced with fixed resources and technology is the:

Production Possibilities Schedule

Allocation

At a local town council, people debated a proposal that would change the _________ of public space for recreational use by demolishing a skate park and building an arboretum.

Production Possiblities

Each row of the ___________ ___________ schedule illustrates the maximum amount of a good or a service that can be produced given the production of the other.

Less

Energy is ____ scarce than wind energy.

Graph

A Useful way to visually represent that data in a production possibilities schedule is by means of a _____ called a production possibilities frontier.

Beyond

Combinations ______ the production possibilities frontier are impossible with the current resources and technology.

Negative

Decreasing marginal benefit describes the _________ relationship between the marginal benefit associated with the use of a good or a service and the quantity consumed.

For two parties to be willing to trade, the terms of trade must be:

Less than the buyer’s opportunity cost but greater than the seller’s opportunity cost.

Comparative

if you are relatively at something , then you are sald to have a(n) ____________ advantage in that activity.

In economics, resource are also called:

-Factors of Production -Inputs

-Household
-Firms

The circular flow model shows how ___________ and _____ interact in two key markets: the resource market and the product market.

Opportunity Cost

Is most plainly visible when spending on the thing means that less money can be spent on another thing.

Differences

Individuals and countries specialize because of ______ in opportunity cost

Product

The circular flow model shows how household and firms interact in two key markets: the resource market and the ________ market.

The idea that people choose to do the things that interest them is:

Self-Interest

Opportunity

The producer with the lowest relative _____________ cost as a comparative advantage and should specialize in the production of that good.

Comparative

Specialization is based on ____________ advantage.

The opportunity cost of producing a good for one producer may be different from that of another because of:

Differences in available resources and technology

Firms

In the circular flow model, only by buying resources can _____ produce the output they will sell to household to generate revenue.

Frontier

A useful way t visually represent the data in a production possibilities schedule is by means of a graph called production possibilities_________.

If an activity if performed where the marginal benefits is greater that the marginal cost (MB>MC), there is :

A net gain to the economy.

Households

In the circular flow model, only by selling resources can _______ obtain the income they need to buy the products they want to consume.

On a production possibilities frontier (PPF) with good X on the horizontal axis and good Y on the vertical axis, we can say that the slope of the PPF ( In absolute value) equals the opportunity cost of production good X. This is true because the slope.

Describes the trade-off resulting from the production of Good X in terms of Good Y.

When the opportunity cost associated with increasing the production of one good or service in term of another is constant at every level of production, There is;

Constant Opportunity Cost

Resources

In the circular flow model, only by buying ____________ can firms produce the output they will sell to households to generate revenue.

A waste of resources that could have been used to produce something else occurs when:

MB<MC

Comparative Advantage Refers to:

Being the lowest relative opportunity cost producer of a good.

The haem in specializing is that

If the demand for the good or service you produce decreases, its price and your income will decrease too.

Efficient

When resources are allocated in such a way that it is possible to increase the production of one good only by decreasing the production of another, then the allocation of resources is ___________.

When a producer has a low opportunity cost, that producer has an advantage in the market because.

He or She will be able to sell at a lower price than other producers.

Specialization

____________________ in trade cause individuals and nations to become interdependent.

Trade

Comparative advantage is the foundation for establishing the benefits of ______.

Comparative

If you are "relatively" better at something, you have a(n) _________ advantage.

-Benefit
-Cost

As the amount of an activity increases, its marginal ______ falls and its marginal _____ rises.

Whether a good or a service will be traded depends largely on :

The terms associated with the trade.

Comparative

A producer has a(n) __________ advantage in the production of a good or a service if his or her relative opportunity cost of production is lower than the opportunity cost of the other producers.

Fixed

When resources are ________, increasing the production of one good causes a decrease in the production of the other.

Comparative

______________advantage is the foundation for establishing the benefits of trade.

The wealth, or additional well-being , created by trade.

Does not have to be monetary.

Low

Producing a good or a service at a _____ opportunity cost giving the producer a comparative advantage in the market.

In the Real World, the opportunity cost increases as production increases, Because:

Some resources are better suited for producing some good or service than others.

-Increasing Opportunity
-Opportunity

The law of ___________ __________ cost says that because some resources are better suited to producing one good or service than another, as the production of a good or a service increases, the _______ cost of each additional unit rises.

Constant

When production is characterized by ________ opportunity cost, the resulting production possibilities frontier will be a straight line.

Constant

The simple model of production assumes that the opportunity cost or production is _______.

Gain from trade can be measured by.

Comparing the level of consumption available before and after the trade.

The benefit, or wealth, that accrues to a buyer or a seller as a result of trading one good, service, or resource for another is the:

Gain from trade.

Interdependent

Specialization causes individuals and nations to become _____________.

Specialization

____________ causes individuals and nations to become independent.

Constant

When you see a production possibilities frontier (PPF) drawn as a straight line, the opportunity cost of one good or service (in terms of units of the other good or service that must be given up) is assumed to be __________.

Suppose a farmer has three kinds of land for growing peaches; good, better, and best. As the farmer increases production, she will use that best land first, and costs will be low. At some point , she will run out of the best land and will have to start using the better land, and cost will be a little higher. this describes the:

Law of increasing opportunity cost.

Only with trade:

It is possible to operate outside the production possibilities frontier.

Inefficient

When resources are allocated in such a way that it is possible to increase the production of one good without decreasing the production of another, then the allocation of recourse is ____________.

Low

If the price is too ____, producers will not be eager to sell , but buyers will be willing and able to buy.

When you decide to turn off the bedroom light on your way to the kitchen so that you can save a little money on your electric bill, you are engaging in:

Marginal Decision Making

Entrepreneurial

___________________ ability is the talent or ability to combine land, labor, and capital t produce goods and services.

A model that concisely describes how goods, services, resources, and money flow back and forth in an economy is the :

Circular Flow Model.

Microeconomics

The study of the economy at the small-scale level, examining individuals and specific markets.

Macroeconomics

The study of the economy at the large-scale level, examining total output, the price level, and other aggregate measures of the economy.

Resource

Anything that is used to produce a good or service, whether it is provided by nature or is manufactured.

Land

All natural resources used in production; sometimes referred to as "Gift of Nature."

Labor

All physical and mental activity devoted to producing good and service.

Capital

The tools, machinery, infrastructure, and knowledge used to produce good and services. Capital is sometimes divided into "physical" and "Human" capital. Physical refers to tangible items that are created to increase productivity; human capital refers to the knowledge and skills that people acquire in order to increase productivity.

Entrepreneurial Ability

The talent or ability to combine land, labor, and capital to produce goods and services. Entrepreneurial ability is different from human capital in that it primarily involves assuming risk and organizing resources into a productive process rather using resources in production.

Scarcity

A condition that results from the inability of limited resources to satisfy unlimited wants.

Relative Scarcity

The comparison of the scarcity of one good, service, or resource to that of another.

Allocation

The process of assigning a good service, or resource to one use instead of another.

Opportunity Cost

The value of the next-best forgone alternative; the value of the opportunity that you gave up when you chose one activity, or opportunity, instead of another. Opportunity cost exist because of scarcity.

Self-interest

The idea that people choose to do the things that interest them.

Marginal Decision Making

The process of making choices in increments by evaluating the additional, or marginal, benefit against the additional, or marginal, cost of an action.

Optimization

The idea that people make choices in order to maximize the overall benefit, or utility , of an action subject to its cost; people will engage in an activity as long as the marginal benefit of an activity is greater than or equal to its marginal cost.

Marginal Benefit

The additional benefit associated with one more unit of an activity.

Marginal Cost

The additional cost associated with one more unit of an activity.

Decreasing Marginal Benefit

The negative relationship between the marginal the marginal benefit associated with the use of a good or service and the quantity consumed; the more of a good or service is consumed, in a given period of time , the lower the marginal benefit associated with each additional unit.

Optimal Level of Output

The level of output where the marginal benefit of the last unit produced and consumed is equal to the marginal cost of that unit.

Production Possibilities Schedule

A table that shows the possible combinations of two different goods or services that can be produced with fixed resources and technology.

Constant Opportunity Costs

A characteristic of production such that the opportunity cost associated with increasing the production of one good or service, in terms of another, is constant at every level of production.

Comparative Advantage

The ability to produce a good or service at a lower relative opportunity cost than another producer.

Specialization

The practice of producing a single good or service rather than producing multiple goods or services.

Terms of trade

The price of one good, service, or resource in term of another.

Gain from trade

The benefit, or wealth, that accrues to a buyer or seller as a result of trading one goods, service, or resource for another. The wealth, or additional well-being, created by trade does not have to be monetary.

Law of increasing Opportunity Cost

A law on economics that reflects the observation that since some resources are better suited to producing one good or service than another, as the production of a good or service increses, the opportunity cost of each additional unit rises.

Circular Flow Model

A model that concisely describes how goods, services, resources, and money flow back and forth in an economy.