Lesson 1
Economists would classify all of the following as land except: Select one: a. Two thousand acres of virgin forest b. A hydroelectric dam c. Crude oil reserves d. Iron ore deposits
b
A schedule or curve that shows the various combinations of two products a consumer can buy with money income is call what?
Budget Line
When a consumer's income increases, the budget line shifts to the left or right?
An increase in consumer's income will shift the budget line to the right.
What economic terminology explains a situation where the product the first trader wants to sell is the same as the product the second trader wants to buy, and product the second trader wants to sell is the same as the product the first trader wants to buy.
Coincidence of Wants
What Adam Smith term is used to explain competition in the economy compelled by firms seeking to promote their own interests to promote the best interest of society as a whole?
Invisible hand
True or false, consumers are not sovereign in a market economy and do not register their economic wants with "Dollar votes".
False
When workers specialize in various tasks to produce a commodity, this situation is referred to as what?
Human specialization or Division of labor
In a command economy, property resources are primarily owned by who? What is the coordinating device(s) in type of economic system?
In a command economy resources are typically owned by the government. The device is a central economic plan.
Broadly defined, competition is present if two conditions prevail; these two conditions are?
Independently acting sellers and buyers operating in a particular market and freedom of sellers and buyers to enter or leave markets.
The economic perspective assumes that people make choices based on their self-interest and that they are purposeful. These economical decisions are also is based upon the comparisons of what?
It is based off the comparisons of marginal benefits and marginal costs. This comparison is known as marginal analysis.
What are the four types of economic resources?
Land, Labor, Capital, and Entrepreneurial Ability
What is the difference between microeconomics and macroeconomics?
Macroeconomics is the bigger picture; it is the economy as a whole. Microeconomics focus more on decision making by individuals; it is a small part of economics that is based off of behavior.
In the circular flow model, what are the two markets and what roles do each of them play within these market?
Product Market, which is the selling of goods and services produced by businesses to households, and Resource market, which is the selling of resources from households to businesses, are the two markets in the circular flow model.
What are the three interrelated features of the economic perspective?
Scarcity and Choice, Purposeful Behavior, Marginalism (Benefits and Costs)
The economizing problem arises because individuals' and society's economic wants for more goods and services or higher-quality goods and services are unlimited and, the economic means or resources to satisfy those wants are what?
The economic means are limited because of limited income.
Two types of statements can be made about economic topics. Name and explain these two types of statements. Which type of statement causes more disagreements amongst economists?
The two types of statements are positive and normative economic statements. Positive economic statements are based on facts or something that can be proven, whereas normative statements are more value/opinion based. Normative statements typically cause more disagreements because they are opinion based.
A point on the production possibilities curve is: Select one: a. Attainable and resources are fully employed b. Attainable, but resources are unemployed c. Unattainable, but resources are unemployed d. Unattainable and resources are fully employed
a
A schedule or curve that shows the various combinations of two products a consumer can purchase with a specific amount of money income is: Select one: a. A budget line b. A tradeoff c. A tangent point d. An optimal output
a
Anything that is generally acceptable in trading for goods and services is a: Select one: a. Medium of exchange b. Measure of value c. Store of value d. Token money
a
From an economic perspective, when a student decides to attend another year of college, the student has concluded that the marginal: Select one: a. Benefits of attending college are greater than the marginal costs b. Costs of attending college has decreased that year c. Benefits of attending college has increased that year d. Costs of attending college will be partly subsidized by the parents or the government
a
If China can produce more clothing in a year than the England using less resources Select one: A. China must have an absolute advantage in producing clothing B. England must have a comparative advantage in producing clothing C. China must have a comparative advantage in producing clothing D. neither China nor England will have a comparative advantage in producing clothing
a
Tammie makes $150 a day as a bank clerk. She takes off two days off work without pay to fly to another city to attend the concert of her favorite music group. The cost of transportation for the trip is $250. The cost of the concert ticket is $50. The opportunity cost of Tammie's attending the concert is: Select one: a. $600 b. $450 c. $300 d. $50
a
Which is not a factor of production? Select one: a. Money b. Land c. Labor d. Capital
a
Explain how (if at all) each of the following events affects the location of a country's production possibilities curve. (8 points) (a) The quality of education increases. (b) The number of unemployed workers increases. (c) A new technique improves the efficiency of extracting copper from ore. (d) A devastating earthquake destroys numerous production facilities.
a) If the quality of education increases, then employers will be able to find more qualified workers with better skills. This would affect the productions curve and make it move outward. B) If the number of unemployed workers increases the production would move inward, away from the curve, meaning that the location of the curve should not be affected. c) The more copper that the country can extract then the curve should move outward. d) A devastating earthquake would destroy many of that country's resources making the curve shift inward, because they cannot reach the original output.
Sierra currently makes $50,000 per year working as a manager at a cable TV company. She develops two possible entrepreneurial opportunities. (5 points) In the first one, Sierra will quit her job and start an organic soap company. She anticipates annual revenue of $465,000 and costs for the necessary land, labor, and capital of $395,000 per year. In the second she will try to develop and Internet-based competitor to the local cable company. Costs for land, labor, and capital of $3,250,000 per year with anticipated revenues of $3,275,000 per year. (a) Should she quit her job and become an entrepreneur? (b) If she does quit her job, which opportunity should she pursue? Include specific dollar evidence in the explanation.
a) Yes, Sierra should quit her job because the net revenue is more than her current job. B. The opportunity she should pursue is starting an organic soap company. After deducting her land, labor, and capital ($395,000) per year from her annual revenue ($465,000), she will have a profit of $70,000. However, you must subtract the opportunity cost of giving up her $50,000 job. So her profit is really $20,000
Adam Smith believed that Select one: A. a free marketplace could never operate efficiently or effectively B. a benevolent deity insured that the free marketplace would always work C. governments have a responsibility to step in whenever the marketplace did not operate according to plan D. individuals in a society were willing to work for lower wages if it helped others in the society.
b
If a production possibilities curve is concave and not a straight line, then: Select one: a. Resources are equally suited to producing alternative products b. Resources are not equally suited to producing alternative products c. Resources are perfectly interchangeable to alternative uses d. There are unemployed resources
b
John Maynard Keynes believed that Select one: A. the "invisible hand" would make it unnecessary for governments to intervene in the free marketplace B. the government needed to intervene in the free marketplace when certain conditions existed (Lecture Notes) C. monetary policy was the best answer to solving problems in the free marketplace D. supply side economics were the answer to dealing with the Great Depression
b
Refer to the graph. The combination 5 drill presses and 2 bread are: Select one: a. An unattainable combination b. An inefficient combination c. An ideal combination d. An efficient combination
b
The role of the entrepreneur in society is to: Select one: a. Provide capital to the firm which the management combines with labor b. Bring the factors of production together and take the risks of producing c. Control the land upon which all production takes place to get the most rent d. Regulate what products are considered safe to market
b
Whose theory implied that unemployment could be avoided by producing enough goods and services to keep all workers busy and pay their wages? Select one: A. John Maynard Keynes B. Jean-Baptiste Say C. Karl Marx D. Adam Smith
b
A fundamental assumption of economics is that Select one: A. labor is the source of all value B. tastes and preferences are determined by advertising C. every decision maker faces constraints D. societies are made up of people who are altruistic E. the only unconstrained entities are large multinational corporations
c
If two variables are directly related they will always graph as: Select one: a. A straight line b. A downsloping line c. An upsloping line d. Parallel lines
c
James Buchanan believed that Select one: A. the "invisible hand" would make it unnecessary for governments to intervene in the free marketplace B. monetary policy was the best answer to solving problems in the free marketplace C. bureaucrats are self-interested utility-maximizers, motivated by things like salary, public reputation, power, etc. (Website "The People's Choice Theory") D. bureaucrats always act in the best interests of a society and not based on their self-interests
c
Opportunity costs exist because Select one: A. there is a price attached to virtually every good or service B. people have different tastes and preferences C. technology is not fixed in the economy D. limited resources cannot satisfy all of the wants in a society
d
The key economic concept that serves as the basis for the study of economics is: Select one: a. Inflation b. Unemployment c. Money d. Scarcity
d
The market system is said to be characterized by "consumer sovereignty." This is because: Select one: a. A large number of consumer goods are produced b. The prices of consumer goods are regulated by government c. Consumer goods are more profitable than investment goods d. Of the role of consumers in determining what goods are produced
d
The purpose of the ceteris paribus assumption used in economic analysis is to: Select one: a. Avoid making normative statements b. Avoid the post hoc, ergo propter hoc fallacy c. Make sure that all relevant factors are considered d. Focus on the effect of a single factor on a certain variable
d
What economic system is based on private ownership of capital? Select one: A. Command economy B. Socialism C. Communism D. Capitalism E. final goods and services produced within the nation's borders during a given year
d
An economic model is Select one: A. a concrete representation of reality B. as close to reality as possible C. too abstract to be useful when assumptions are involved D. unrelated to reality E. an abstract representation of reality
e
Macroeconomics is Select one: A. a hard science B. concerned with how individuals in a society make their own personal economic decisions C. concerned with how individuals in a society behave and the impact of their choices on the whole society D. a social science E. c and d above
e