Term
| What are the four types of scarce resources? |
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Definition
| Land, Labor, Capital, Entrepreneur Ability |
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Term
| Where there is scarcity there is incentive to do what? |
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Definition
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|
Term
| What is the factor payment to owners of land? |
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Definition
|
|
Term
| What is the factor payment to owners of labor? |
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Definition
|
|
Term
| What is the factor payment to owners of Capital? |
|
Definition
|
|
Term
| What is the factor payment to owners of Entrepreneur Ability? |
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Definition
|
|
Term
| What are the two functions of Factor Payments? |
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Definition
| Income Sources on one hand and costs of production to the other. |
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Term
| All of us can offer what kind of resource? |
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Definition
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|
Term
| What is the nature of the scarcity problem? |
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Definition
| There is an allocation problem, with limited resources, how does one put their resources to the best use possible. |
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Term
| Why do we rely on specialization and exchange? |
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Definition
| It is an efficient way to allocate resources. |
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Term
| Why are economic agents prudent to do what they what they do best? |
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Definition
| They practice rational self-interest. |
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Term
| What is an economic agent? |
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Definition
| Anyone who can make an economic choice or decision. |
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Term
| What is Rational Self-Interest? |
|
Definition
|
|
Term
| What is Optimization Behavior? |
|
Definition
| Behavior that is trying to make something to be the best it possibly can. |
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Term
| What are two types of Optimization Behavior? |
|
Definition
Profit Maximization
and
Utility Maximization |
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Term
|
Definition
| Individuals, Groups, and Regions/Nations. |
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Term
| What is the law of comparative advantage? |
|
Definition
| The individual or country with the lowest opportunity cost of producing a particular good, should specialize in producing that good. |
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Term
| What is Bill and Ted's Excellent Ironing Adventure? |
|
Definition
| An example of the law of comparative advantage. |
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|
Term
| What is the problem of Bill and Ted's Excellent Ironing Adventure? |
|
Definition
| Bill and Ted must type a three page paper and iron their shirts before they can go to a party. |
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Term
| In Bill and Ted's Excellent Ironing Adventure what are Bill's Skills? |
|
Definition
| It takes him ten minutes a page to type a paper, it takes him ten minutes to iron shirts. |
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Term
| In Bill and Ted's Excellent Ironing Adventure what are Ted's Skills? |
|
Definition
| It takes him twenty minutes a page to type a paper, it takes him five minutes to iron shirts. |
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Term
| In Bill and Ted's Excellent Ironing Adventure, how long do Bill and Ted have until they must go to the party? |
|
Definition
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|
Term
| In Bill and Ted's Excellent Ironing Adventure who is the fastest typist? |
|
Definition
|
|
Term
| In Bill and Ted's Excellent Ironing Adventure who is the fastest at ironing shirts? |
|
Definition
|
|
Term
| In Bill and Ted's Excellent Ironing Adventure, what is Bill's Comparative Advantage In? |
|
Definition
|
|
Term
| In Bill and Ted's Excellent Ironing Adventure, what is Ted's Comparative Advantage In? |
|
Definition
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|
Term
| In Bill and Ted's Excellent Ironing Adventure, specializing in the skills that they each have a comparative advantage in and exchanging products allows them to do what? |
|
Definition
| Reach their maximum efficiency |
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|
Term
| Specialization and Exchange allow groups and individuals to do what? |
|
Definition
| Produce more output as all parties involved benefit. |
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Term
| What is the fundamental economic problem? |
|
Definition
|
|
Term
| What is the main way entities allocate resources? |
|
Definition
|
|
Term
|
Definition
| Schedule or function that shows the various amounts of a product that consumers are willing and able to purchase at various prices per unit of time. |
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|
Term
| How can a consumer reveal demand? |
|
Definition
| They must be willing and able to purchase a product. |
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|
Term
| What is the law of demand? |
|
Definition
| There exists an inverse relationship between "price" and "quantity demanded". |
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Term
| When price goes up, quantity demanded goes where? |
|
Definition
|
|
Term
| When price goes down, quantity demanded goes where? |
|
Definition
|
|
Term
| When two variables are in an inverse relationship, when one variable moves in a direction, the other variable must move in what direction? |
|
Definition
|
|
Term
| What is Utility in Economics? |
|
Definition
|
|
Term
| What is Marginal Utility in Economics? |
|
Definition
| The amount of satisfaction received for each additional good consumed. |
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|
Term
| For each good consumed, the marginal utility derived from the good eventually does what? |
|
Definition
|
|
Term
| To Inspire More Consumption due to the problem of diminishing marginal utility, then what must happen? |
|
Definition
| The price of a product must go down in order to increase quantity demanded of the product. |
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|
Term
|
Definition
| Income measured in current dollars not adjusted to inflation that has nothing to do with buying power. |
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|
Term
| (Nominal Income / Prices) Equals What? |
|
Definition
|
|
Term
|
Definition
| The buying power of money income. |
|
|
Term
| The smaller the denominator the bigger the what? |
|
Definition
|
|
Term
| What happens to buying power when prices are lowered? |
|
Definition
|
|
Term
| What happens to buying power when prices are increased? |
|
Definition
|
|
Term
| What happens when buying power is increased? |
|
Definition
| The Quantity Demanded Increases |
|
|
Term
| What are the three theoretical justifications of the Law of Demand? |
|
Definition
1.)Diminishing Marginal Utility
---
2.)Income Effect
---
3.)Substitution Effect |
|
|
Term
What is
(Nominal Income/Prices)=Real Income? |
|
Definition
|
|
Term
| When two products can be substituted for one another and one of the products has a lower relative price to the other product what might happen? |
|
Definition
| The consumer may switch to the product that costs relatively lower than the product it can be substituted with and increase the quantity demanded of the product that costs relatively less than the product it can be substituted with. |
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|
Term
| What is an increase in demand? |
|
Definition
| Consumers want more of a good at any price or regardless of the price. |
|
|
Term
| What is a decrease in demand? |
|
Definition
| Consumers want less of a good at any price or regardless of the price. |
|
|
Term
| What are the determinants of demand? |
|
Definition
| The variables held constant when a demand curve is drawn. They shift demand. |
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