Econ Final

Front 1

Economics is primarily the study of

Back 1

the problem of scarce resources relative to human wants

Hint 1

Macroeconomics is the study of the economy as a whole or its basic aggregates such as the business, household, and government sectors

Front 2

Macroeconomics mainly focuses upon

Back 2

the economy as a whole

Hint 2

Macroeconomics is the study of the economy as a whole or its basic aggregates such as the business, household, and government sectors

Front 3

The production possibilities curve

Back 3

separates all combinations of two goods that can be produced from those that cannot

Hint 3

The production possibilities curve is a frontier, indicating the maximum amount of one good achievable for a given amount of the other good. Combinations outside of this frontier are unattainable

Front 4

Moving from left to right, the typical production possibilities curve has

Back 4

an increasingly steep negative slope

Hint 4

As resources are typically not perfectly adaptable to production of alternative goods, increased production of one good will require increasing sacrifices of the other

Front 5

According to economists, human wants will never be fulfilled completely because

Back 5

productive resources are scarce

Hint 5

The fundamental economic problem is the scarcity of productive resources relative to human wants. The economic perspective assumes purposeful, self-interested behavior

Front 6

Economic theory suggests that purposeful behavior and economic growth will eventually solve the problem of scarcity t/f

Back 6

False

Hint 6

Because human wants always exceed available productive resources, scarcity will always be present

Front 7

In studying economic principles, economists make use of

Back 7

both the economic perspective and the scientific method

Hint 7

Both the economic perspective and the scientific method are fundamental to the study of economics

Front 8

Suppose you have a $20 iTunes gift card with which you can buy (download) songs or videos. Songs cost $1.00 each and videos cost $2.00 each. The opportunity cost of one video

Back 8

is constant and equal to 2 songs

Hint 8

The purchase of an additional video requires $2.00. At a price of $1.00 each, two songs would have to be given up to obtain the required amount for one video

Front 9

Purposeful behavior and marginal analysis

Back 9

are part of the economic perspective

Hint 9

The economic perspective assumes scarcity of resources relative to human wants, assumes that individuals rationally pursue their self-interest, and assumes that individuals compare costs and benefits at the margin. These assumptions hold in both the long term and the short term

Front 10

Two rational individuals will always make the same choices when faced with the same circumstances

Back 10

False

Hint 10

Rational individuals may make different choices because they have different preferences

Front 11

Competition is characterized by

Back 11

freedom of buyers to enter or leave markets

Hint 11

The two major characteristics of competition are independently acting buyers and sellers and the freedom of buyers and sellers to enter or leave the market

Front 12

It is in a firm's best interest to utilize the least-cost production technique because

Back 12

only this technique is consistent with maximum profits

Hint 12

Any output that is not produced with the least-cost method could, by definition, be produced at lower cost, thereby increasing the firm's profit

Front 13

Economic profits and losses

Back 13

help determine which industries survive or fail

Hint 13

Economic profits and losses provide the signal to firms to either exit or leave an industry. Industries that sustain losses will fail while profitable ones will expand

Front 14

The competitive market system encourages innovation and technological advance, primarily through

Back 14

profitable returns to innovative firms

Hint 14

Firms that successfully innovate will be rewarded with higher profits in a market system. Self-interest and pursuit of profits assures that rival firms will spread any new technology

Front 15

The use of capital goods

Back 15

is often more efficient than more direct production methods

Hint 15

Capital goods include all manufactured aids to production. These will be employed because they often allow for more efficient production

Front 16

In terms of the circular flow diagram, firms receive revenue in the _____ market and incur costs in the _____ market

Back 16

product; resource

Hint 16

Firms exchange goods for money in the product market and exchange money for production inputs in the resource market. The money firms receive is "revenue;" the money they spend is "costs."