ECON 1B03 Lecture Notes - Planned Economy, Economic Equilibrium, Market Failure

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magentamacaw163

1 Apr 2013

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ECON 1B03 Full Course Notes

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Micro: focuses on individual parts of the economy- how households and firms interact. Macro: focuses on the economy as a whole- how inflation, unemployment and economic growth affect economy. Allocates resources through the decentralized decisions of firms and households. Households decide what to buy and who to work for firms decide how much to produce and who to hire. All production and distribution decisions are made by a central authority (ie. government) A combination of both market and command economy. Everything you have to give up in order to attain a certain something. Example: to attend mcmaster it costs 25,000 a year; you could have spent that money on something else, such the cost of the best foregone alternative as a car implicit costs: explicit costs. Marginal changes are small, incremental adjustments to an existing plan of action. Example: a firm will wonder what will happen to the profit if we decide to produce one more good? .

Related Questions

true or false

Human and nonhuman resources are the inputs used to produce goods and services.

Since resources are scarce, society must make choices about what to produce.

Consumers decide what gets produced in Japan.

Microeconomics is the study of aggregate behavior in the economy.

The three basic questions in economics are who, what and why.

The law of demand states that the quantity demanded of any good is inversely related to its price.

coppermole152

Part 1.Choose the correct answer of the following:

1.In a market economy, economic activity is guided by

a.Self-interest and prices

b.The government.

c.Corporations.

d. Central planners.

2. Which of the following decisions must be made by all economies?

a.How much to produce? When to produce? How much does it cost?

b.What to produce? How to produce? For whom to produce?

c.What is the price? Who will produce it? Who will consume it?

d. None of the above

3.Since the resources used in the production of goods and services are limited, society must:

a.Reduce the use of those resources

b.Try to get more resources

c.Make choices about how to use resources

d.Focus on their most abundant resource

4.Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

a.Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.

b.There is no such thing as a free lunch.

c.People buy more when prices are low than when prices are high.

d. No matter how much people earn, they tend to spend more than they earn.

5.If real GDP increased by 2 percent, then

a.Government spending increased by 2 percent

b.The price level has increased by 2 percent

c.Real output/production has increased by 2 percent

d. The increase might have been caused by an increase in the price level or output, but we cannot tell for sure

6. Which of the following would show an efficient economy?

a.Uses the least costly amount of resources available

b.Has a small amount of people who do not work

c.Resources are used to make the most goods and services possible

d.None of the above

7.What is the type of unemployment that occurs when people take time to find a job?

a.cyclical

b.frictional

c.Disguised

d.structural

emeraldoyster872

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

ECON 1B03 Lecture Notes - Planned Economy, Economic Equilibrium, Market Failure

ECON 1B03 Full Course Notes

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