Exam (elaborations)
MACROECONOMICS HAMMOCK FSU (1)
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- Macro Hammock
MACROECONOMICS HAMMOCK FSU (1)
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MACROECONOMICS HAMMOCK FSUScarcity - ANS-having unlimited wants but limited resources. This forces ration. Scarcity can not
be eliminated.
Opportunity Cost - ANS-the value of the next best alternative. "There is no such thing as a free
lunch"
Marginal Benefit vs Marginal cost - ANS-benefits must outweigh the costs
Positive statements - ANS-factual and can be proven
Normative Statements - ANS-opinions "ought to be " or "should be "
Ceteris Paribus - ANS-it is usually hard to isolate all the different variables that may influence or
change the outcome of what you are studying.
"hold all things constant"
Transaction costs ____________
the gains from trade - ANS-reduce
Middlemen reduce transaction costs, therefore they _______________
gains from trade - ANS-increase
Productions possibilities Curve (ppc) - ANS-Shows the maximum combination of two goods that
can be produced from a set of fixed resources
tradeoff - ANS-you can only produce more of one good if you produce less of another
Outward Shift - ANS-caused by a technological advance that increases the amount of outputs
while keeping the same number of inputs
Outward Shift caused by - ANS--Increased resources
-improved technology
-improved legal system
-more work/less leisure
A point inside the curve - ANS-ineffecient
A point on the curve - ANS-effecient
Point outside the curve - ANS-unattainable
, Opportunity costs differ among nations due to differences in - ANS-land, labor, capital, and
technology
change in quantity demanded - ANS-movement along the curve caused by a change in price
change in demand - ANS-shift of the entire curve caused by anything other than price
change in quantity supplied - ANS-movement along the curve caused by a change in price
change in supply - ANS-shift of the entire curve caused by anything other than price
resource prices increase - ANS-supply decreases
resource prices decrease - ANS-supply increases
changes in technology - ANS-increases supply because costs are driven down because
production is cheaper due to new technology
changes in taxes - ANS-increase taxes=decreased supply
decreased taxes=increased supply
political unrest and weather - ANS-shift supply
market prices - ANS-determined where supple and demand curves intersect
Equilibrium - ANS-when quantity supplied = quantity demanded
equilibrium is reached - ANS-all gains from trade have been realized
law of demand - ANS-as price rises quantity demanded falls
diminishing marginal utility - ANS-as we consume more of something additional units don't bring
us as much satisfaction
consumer surplus - ANS-difference between what a consumer is willing to pay and what the
consumer actually pays
market demand - ANS-horizontal sum of individual demand curves (add left to right)
invisible hand principle - ANS-self-interested individuals will produce what is valued by society
the most without direction of central authority
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