Exam (elaborations)
Introductory Macroeconomics (ECON 1BB3) Test -1
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Introductory Macroeconomics (ECON 1BB3) Test -1
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1-194 of 194What is a diminishing return?
- The more resources devoted to an activity, the less productive additional
resources become (ex. studying).
- As we move more and more resources from good A to good B, the
amount of B increases, but the increase gets smaller and smaller.
,How do the 'prices of related goods' shift market demand (substitutes ONLY)?
- Goods and services that can be used for the same purpose are
substitutes of each other.
- Two goods are substitutes of one another if, when you buy more of one,
you buy less of the other.
- A decrease in the price of a substitute causes the demand curve for a
good to shift to the left.
- An increase in the price of a substitute causes the demand curve for a
good to shift to the right.
What is Invention?
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The development of a new good or process for making a good.
What is Net Benefit and how can we optimize net benefit?
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- The net benefit is the benefit minus the cost.
- To make the net benefit big as possible, do more of any activity with a
marginal benefit greater than the marginal costs (MB > MC).
What are the effects of 'supply and demand' on equilibrium?
,Give this one a go later!
- When the supply curve shifts to the right, there will be a surplus at the
original equilibrium price, the surplus is eliminated as the equilibrium falls,
and the equilibrium quantity rises.
- If existing firms exit the market, the supply curve will shift to the left,
causing the equilibrium price to rise and the equilibrium quantity to fall.
What do economists mean when they say "people are rational"?
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- Economist believe that people make decisions and take actions that they
believe will make them happy.
- Economists tend to think people make decisions that have more benefit
than cost.
How do 'population and demographics' shift market demand (population ONLY)?
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- Population determines the total number of consumers who could
demand a product.
- As population increases, the number of consumers grows and so does
demand.
- An increase in population will shift the demand curve to the right.
What are the two distinguishing features of a Market Economy?
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, - Markets directly reward people's hard work.
- Decision making is shared by everyone in the market.
What does the Provincial government have to do with property rights?
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- The Provincial government deals with personal and real property.
- Provincial property rights legislation is often called the sale of goods act.
- The sale and purchase of land is governed by each province's real estate
law, as well as common law (NA for Quebec).
At what point on the PPF is the best?
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- We can choose the best point on the PPF by using allocative efficiency.
- This point is reached when society is making the combination of goods
and services that are most valued by consumers.
What are the 3 classifications of variables?
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- Real vs Nominal
- Dependent (endogenous) vs Independent (exogenous)
- Stock vs Flow
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