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Macro Exam 1 | ECON 2105 - Principles of Macroeconomics, Quizzes of Introduction to Macroeconomics

Class: ECON 2105 - Principles of Macroeconomics; Subject: Economics; University: Georgia Gwinnett College; Term: Fall 2011;

Typology: Quizzes

2010/2011

Uploaded on 09/21/2011

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TERM 1
Comparitive Advantage
DEFINITION 1
In economics, the law of comparative advantage says that
two countries can both gain from trade if, in the absence of
trade, they have different relative costs for producing the
same goods.
TERM 2
Production Possibilities Frontier
DEFINITION 2
In economics, a production-possibility frontier, sometimes called a
production-possibility curve or product transformation curve, is a
graph that compares the production rates of two commodities that
share the same factors of production . ...because the PPF is
bowed outward, the opportuni ty cost of a cell phone
increases as the quantity of cell phones produced
increases
TERM 3
Market
DEFINITION 3
A market is any one of a variety of systems, institutions,
procedures, social relations and infrastructures whereby
parties engage in exchange.
TERM 4
Labor
DEFINITION 4
Work time and work effort that people devote to producing
goods and services
TERM 5
Entrepreneurship
DEFINITION 5
Human resource that organizes labor, land, and capital
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Comparitive Advantage

In economics, the law of comparative advantage says that two countries can both gain from trade if, in the absence of trade, they have different relative costs for producing the same goods. TERM 2

Production Possibilities Frontier

DEFINITION 2 In economics, a production-possibility frontier, sometimes called a production-possibility curve or product transformation curve, is a graph that compares the production rates of two commodities that share the same factors of production. ...because the PPF is bowed outward, the opportunity cost of a cell phone increases as the quantity of cell phones produced increases TERM 3

Market

DEFINITION 3 A market is any one of a variety of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. TERM 4

Labor

DEFINITION 4 Work time and work effort that people devote to producing goods and services TERM 5

Entrepreneurship

DEFINITION 5 Human resource that organizes labor, land, and capital

Capital

In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. TERM 7

Land

DEFINITION 7 The "gifts of nature" that we use to produce goods and services TERM 8

Marginal Benefit

DEFINITION 8 In economics, the marginal utility of a good or service is the utility gained from an increase (or decrease) in the consumption of that good or service. TERM 9

Marginal Cost

DEFINITION 9 In economics and finance, marginal cost is the change in total cost that arises when the quantity produced changes by one unit. TERM 10

Rational Choice

DEFINITION 10 One that uses the available resources to best achieve the objective of the person making the choice

Normal Good

A good for which demand increases when income increases TERM 17

Opportunity Cost

DEFINITION 17 Opportunity cost is the cost of any activity measured in terms of the value of the best alternative that is not chosen. TERM 18

Free Lunch

DEFINITION 18 Giving something without giving up something else TERM 19

Scarcity

DEFINITION 19 Scarcity is the fundamental economic problem of having humans who have unlimited wants and needs in a world of limited resources. TERM 20

Self-Interest

DEFINITION 20 Self-interest generally refers to a focus on the needs or desires of oneself.

Social Interest

The choices that are best for society as a whole TERM 22

Sunk Cost

DEFINITION 22 In economics and business decision-making, sunk costs are retrospective costs that have already been incurred and cannot be recovered. TERM 23

Production Efficiency

DEFINITION 23 a situation in which we cannot produce more of one good or service without producing less of something else TERM 24

Tradeoff

DEFINITION 24 Giving up one thing to get something else TERM 25

Opportunity Cost Equation

DEFINITION 25 For a cell phone: The decrease in the quantity of DVDs / by the increase in the number of cell phonesOC increases as more cell phones are producedWhen the opportunity cost of a cell phone is X DVDs the oc of a DVD is 1/X cell phones

Market Equilibrium

occurs when the quantity supplied= quantity demanded TERM 32

Equilibrium Price

DEFINITION 32 PRICE @ WHICH quantity demanded=quantity supplied TERM 33

Equilibrium Quantity

DEFINITION 33 quantity bought and sold @ equilibrium price TERM 34

PRICE ELASTICITY OF

DEMAND

DEFINITION 34 shows the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. TERM 35

Percentage Change in Price

DEFINITION 35 (NEW PRICE- INITIAL PRICE) X100 INITIAL PRICE

MIDPOINT METHOD

(NEW-INITIAL)(NEW-INITIAL)/2 X

TERM 37

ELASTIC

DEFINITION 37 the percentage change in the quantity demanded exceeds the percentage change in the price TERM 38

UNIT ELASTIC

DEFINITION 38 the percentage change in the quantity demanded equals the percentage change in the price TERM 39

INELASTIC

DEFINITION 39 the percentage change in the quantity demanded is less than the percentage change in the price