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Micro economics terms chapters 1-5
Terms in this set (38)
economics is the study of ______.
economics is a _________ science that examines how people choose among alternatives available to them, it involves people and their behavior
what are the three central ideas to economics?
scarcity, choice, and opportunity cost
scarcity is the amount of ______ we have.
scarcity is the condition of having to choose among __________.
scarcity begs the question on how a good should be _______, how much should be _________, and who it should be ______ to.
produced, produced, and dispersed
_________ ________ is the value of the best alternative forgone in making any choice.
Opportunity cost is the value of the best opportunity forgone in a particular choice. It is not simply the amount __________ on that choice.
what are the three fundamental economic question?
1.) what should be produced?
2.) how should goods be produced?
3.) For whom should goods and services be produced?
what is an example of opportunity cost and scarcity?
the rising cost of energy
what is an example that confronts scarcity?
increasing Airport security after 9/11
what are the other factors involved with opportunity cost
what does a production possibility model show?
-the goods and services that an economy is capable of producing
-its possibilities—given the factors of production and the technology it has available.
a production possibility model shows how a company can ____________.
use resources fully and efficiently and suggests some important implications for international trade.
a production possibility model can be used for _____ _______ and to show _____________ _______.
international trade and economic growth
a straight lined graph shows a ____ ______.
what are the three factors of production?
labor, capital, and resources
what is labor?
human effort that can be applied to production
what is capital?
tools produced in order to manufacture other goods
what characteristic defines a natural resource?
that it is found in nature unaltered, ex oil
what are two factors that come in play while producing goods and services?
technology and the entrepreneur
A __________ __________ ______-is a graphical representation of the alternative combinations of goods and services an economy can produce
production possibility curve
an economy has a ___________ __________ in producing a good or service if the opportunity cost of producing that good
or service is lower for that economy than for any other
The bowed-out production possibilities curve illustrates the law of increasing _______ ________
The production possibilities model does not tell us _____ on the curve a particular economy will operate.
is better to be on the production possibilities curve than __________ it.
What do the points inside the production possibility curve show?
unemployment and unused resources, it's possible to be at these points but it's not optimal
An economy achieves a point on its production possibilities curve only if it
allocates its factors of production on the basis of __________ ____________
_______ means that an economy is producing the goods and services
concepts of comparative advantage and the production possibilities curve relates to _____________ ____________.
having certain countries specialize in producing a good at which they have a comparative advantage helps produce the most _________.
If two continents were willing to move from _________ to _________, the world could achieve an increase in the production of both goods.
_________ allows the production of more of all goods and services
Restrictions on trade thus __________ production of goods and services.
a nation's trade policy has nothing to do with its level of _________ of its factors of production
An increase in the physical quantity or in the quality of factors of
production available to an economy will result in ______________ _________.
economic growth will shift the economy's production possibility curve _______.
what are two factors that increase economic growth?
technology and education
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