eco 2
Flashcard 11
Q: What is the definition of value added in production?
A: The numerical difference between the value of final products and the cost of raw materials.
Flashcard 12
Q: What are factor payments?
A: Monetary payments to resource owners involved in value creation, including wages, interest, rent, and profits.
Flashcard 13
Q: What is the production process?
A: The process of organizing labor, capital, and raw materials to transform them into finished goods or services.
Flashcard 14
Q: What are the Ten Core Principles of Economics (Mankiw, 2012)?
A:
People face tradeoffs.
The cost of something is what you give up to get it.
People respond to incentives.
Rational people think at the margin.
Trade can make everyone better off.
Markets are a good way to organize economic activity.
Governments can sometimes improve market outcomes.
A nation's standard of living depends on its ability to produce goods and services.
Prices rise when the government prints too much money.
Society faces a short-term tradeoff between inflation and unemployment.
Flashcard 15
Q: What is the role of entrepreneurship in economics?
A: Entrepreneurs organize and manage resources, taking on risks to produce goods or services, and are rewarded with profits.
Flashcard 16
Q: What is consumption in economics?
A: The acquisition and use of goods and services to fulfill needs (e.g., food, shelter) or wants.
Flashcard 17
Q: What are the two types of distribution in economics?
A:
Physical Distribution: The transportation of goods from manufacturers to consumers.
Functional Distribution: The distribution of wealth across different income groups.
Flashcard 18
Q: What is the tradeoff between inflation and unemployment?
A: In the short term, society faces a tradeoff between lowering unemployment and controlling inflation.
Flashcard 19
Q: What is productivity?
A: The efficiency with which resources are used to produce goods or services, often measured in terms of output or value added.