ECON 1120 Chapter Notes - Chapter 3: Bacon, Demand Curve, Ceteris Paribus

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orchidjackal488

27 Jun 2016

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Firm - an organization that transforms resources (inputs) into products (outputs). Firms are the primary producers in an economy. Entrepreneur - someone who organizes, manages, and takes the risks of the firm, while taking a new idea or product and turning into a successful venture. Product/output markets - the markets in which goods and services are exchanged. Factor/input markets - the markets in which resources used to produce products are exchanged. Labor market - the input market in which households supply work for wages to firms that need labor. Capital market - the input market in which households supply their savings, for interest or for claims to future profits, to firms that need funds to buy capital goods. Land market - the input market in which households supply land or other real property to firms in exchange for rent. Factors of production - the inputs of the production process: land, labor, and capital.

Related Questions

The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs.

Based on this model, households earn income when (firms /households) purchase (resources/goods and services) in resource markets.

Suppose Becky earns $650 per week working as an analyst for A-plus Accountants. She uses $10 to order a mojito cocktail at Little Havana. Little Havana pays Alex $250 per week to wait tables. Alex uses $250 to purchase tax services from A-Plus Accountants.

Identify whether each of the following events in this scenario occurs in the resource market or the product market.

1.Alex earns $250 per week working for Little Havana. (Resource Market / Product Market)

2. Becky spends $10 to order a mojito cocktail. (Resource Market / Product Market)

3. Becky earns $650 per week working for A-Plus Accountants. (Resource Market / Product Market)

Which of the elements of this scenario represent a flow from a household to a firm? This could be a flow of dollars, inputs, or outputs. Check all that apply.

( ) The mojito Becky receives

( ) The $250 Alex spends to purchase tax services from A-Plus Accountants

( ) The $250 per week Alex earns working for Little Havana

( ) Becky's labor

cyanhamster801

Microeconomics

A	B	Answer
As a student of economics, when you speak of scarcity, you are referring to the ability of society to.	A. Extra benefit
What is the economic meaning of the expression that "There is no such thing as a free lunch?"	B. Entrepreneur.
Which expression is another way of saying "marginal benefit"?	C. Very limited government role in the economy
A tradeoff exists between two economic goals, X and Y. This tradeoff means that.	D. Price ceilings and the resulting product shortages.
The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the	E. Explicit costs.
The Soviet Union economy of the 1980s would best be classified as	F. Easy entry, many firms, and differentiated products
The simple circular-flow model shows that workers, entrepreneurs, and the owners of land and capital offer their services through	G. Product markets
Laissez-faire capitalism is characterized by	H. Satisfy economic wants given limited resources.
Black markets are associated with	I. Oligopoly
Cash expenditures a firm makes to pay for resources are called	J. The Resource Markets
Which set of characteristics below best describes the basic features of monopolistic competition	K. A command System
Mutual interdependence would tend to limit control over price in which market model	L. Getting more of X requires getting less of Y
Markets in which firms sell their output of goods and services are called	M. It means that there is an opportunity cost when resources are used to provide "free" products

chocolatemuskrat416

1. The cost-benefit approach to deciding whether or not to undertake any activity argues that you should engage in the activity if:
a. The marginal cost of the activity exceeds the marginal benefit of the activity.
b. The marginal benefit of the activity exceeds the marginal cost of the activity.
c. There are benefits associated with the activity
d. There are costs associated with the activity

2. In the circular flow model, the household sector:
a. Demand goods and services in output markets, while the business sector supplies them.
b. Supplies goods and services in output markets, while the business sector demands them.
c. Demands and supplies goods and services in output markets.
d. Neither demands nor supplies goods and services in output markets.

3. In resource markets, households operate on the ________ side and business firms operate on the ______ side; these activities represent ______for households and _______ for business firms.
a. Demand; supply; income; revenue
b. Demand; supply; expenditures; revenue
c. Supply; demand; expenditures; costs
d. Supply; demand; income; costs

4. Ice cream sales and the incidence of polio were strongly correlated prior to the development of the polio vaccine. Assuming that eating ice cream caused polio is an example of the:
a. Fallacy of composition
b. Fallacy of division
c. Fallacy of false cause
d. Fallacy of ceteris paribus

5. Assuming that everyone is better off when a bridge is built in Alaska to serve a small community is an example of the:
a. Fallacy of composition
b. Fallacy of division
c. Fallacy of false cause
d. Fallacy of ceteris paribus

6. A production possibilities frontier for two outputs is drawn assuming that:
a. Opportunity cost is fixed, but the quantity and quality of resources changes
b. Both outputs use the same quantity of each resource, but the technology differs
c. The amount of resources currently available for production is fixed
d. The technology available can only be applied to producing one of the outputs

7. When wants and needs exceed the resource available to satisfy them:
a. Scarcity exists and society must rely on the government to allocate resources.
b. Scarcity exists and society must rely on free markets to allocate resources.
c. Scarcity exists and decisions must be made about how to allocate limited resources among competing uses.
d. Scarcity does not exist so it is not necessary to allocate resources.

8. If Carl is able to produce a greater number of baskets per hour than Sheila, then:
a. Carl cannot have a comparative advantage in the production of baskets
b. Carl has an absolute advantage in the production of baskets
c. Sheila has an absolute advantage in the production of baskets
d. Sheila has a comparative advantage in the production of baskets

9. If Carl's opportunity cost per basket is 4 bowls, but Sheila's opportunity cost per basket is 3 bowls, then:
a. Carl has a comparative advantage in the production of baskets
b. Carl has an absolute advantage in the production of baskets
c. Sheila has an absolute advantage in the production of baskets
d. Sheila has a comparative advantage in the production of baskets

10. Which of the following is not an example of the factor of production or economic resource referred to as capital?
a. An office building
b. Computers used by a tax preparation business
c. Lawnmowers owned by a landscaping firm
d. Money used to start a new business.

lavenderhippopotamus513

ECON 1120 Chapter Notes - Chapter 3: Bacon, Demand Curve, Ceteris Paribus

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