AREC 385 EXAM 2 QUESTIONS WITH 100%
VERIFIED CORRECT ANSWERS!!
Comparative Advantage
When a persons opportunity cost of preforming a task is lower than the other person's
opportunity cost.
Absolute Advantage
When a person can preform a task in less time than the other person.
Sunk Cost
A cost that is beyond recovery at the moment a decision must be made
Marginal Benefit
Increases in total benefit that results from carrying out one additional unit of an activity
Income Elasticity of Demand
The percent change in quantity demanded from a 1% change in income
Opportunity Cost
The value of what must be forgone to undertake an activity
Production Possibilities Curve
A graph that describes the max amount of one good that can be produced for every possible level
of production of the other good
Excess Demand
The amount by which quantity demanded exceeds quantity supplied
Production
A system that converts inputs into outputs
Microeconomics (Individual Market)
, The study of individual choice and it's implications for the behavior of prices and quantities
Price Ceiling
Maximum allowable price set by law to protect consumers
Macroeconomics (National)
The study of the performance of national economics and the policies that governments use to try
to improve that performance
Price Floor
Minimum allowable price set by law
Scarcity Principle
People have unlimited wants and limited resources
Shifts in Demand
When buyers are willing to buy more/less at each price
Technology
Recipe for production
Short Run
The period of time when at least one of the firms factors of production is fixed
Normal Profit
Accounting profit - Economic profit
Utility
The satisfaction people derive from consumption "Utils" (Units of Happiness)
Economic Rent
The portion of a payment to a factor of production that exceeds the owners reservation price
Long Run
VERIFIED CORRECT ANSWERS!!
Comparative Advantage
When a persons opportunity cost of preforming a task is lower than the other person's
opportunity cost.
Absolute Advantage
When a person can preform a task in less time than the other person.
Sunk Cost
A cost that is beyond recovery at the moment a decision must be made
Marginal Benefit
Increases in total benefit that results from carrying out one additional unit of an activity
Income Elasticity of Demand
The percent change in quantity demanded from a 1% change in income
Opportunity Cost
The value of what must be forgone to undertake an activity
Production Possibilities Curve
A graph that describes the max amount of one good that can be produced for every possible level
of production of the other good
Excess Demand
The amount by which quantity demanded exceeds quantity supplied
Production
A system that converts inputs into outputs
Microeconomics (Individual Market)
, The study of individual choice and it's implications for the behavior of prices and quantities
Price Ceiling
Maximum allowable price set by law to protect consumers
Macroeconomics (National)
The study of the performance of national economics and the policies that governments use to try
to improve that performance
Price Floor
Minimum allowable price set by law
Scarcity Principle
People have unlimited wants and limited resources
Shifts in Demand
When buyers are willing to buy more/less at each price
Technology
Recipe for production
Short Run
The period of time when at least one of the firms factors of production is fixed
Normal Profit
Accounting profit - Economic profit
Utility
The satisfaction people derive from consumption "Utils" (Units of Happiness)
Economic Rent
The portion of a payment to a factor of production that exceeds the owners reservation price
Long Run
