ECON: Chapter 1-2 DSM
produce more of a good or service than competitors using the same amount of resources
Absolute advantage is the ability of an individual, firm, or country to:
all trading partners who specialize in goods where they have competitive advantage
According to the theory of comparative advantage, specialization and free trade will benefit:
invisible hand
Adam Smith observed that people pursuing their own self-interest in a free market will actually result in the best interest of society as if these actions were guided by a(n):
An example of economic capital
Bulldozer
Economic decisions are made at every level in society. When we try to decide which production method to use among several alternatives, which of the following key economic questions are we trying to answer?
How do we produce the product?
has a lower opportunity cost in the production of that good.
If a country has a comparative advantage in the production of a good, then that country:
A positive economic statement
If minimum wage rates rise, then unemployment will rise.
The division of labor
In his 1776 book, "An Inquiry into the Nature and Causes of the Wealth of Nations," Adam Smith notes that specialization increases productivity. Which of the following was the cause of this phenomenon?
are guaranteed by two amendments in the US Constitution.
In the U.S., property rights:
firms
In the circular flow model of the economy, __________ are the suppliers of goods and services
Product markets
In the circular flow model, which of the following refers to markets where goods such as computers or services such as medical treatment are offered?
centrally planned economy
In what type of economy does the government decide how economic resources will be allocated?
People respond to economic incentives
Jim declined to take part in a health study on a free basis but changed his mind after being offered $1,000 to participate in the study. Jim's behavior best illustrates which economic principle?
an absolute advantage in both jobs
Ms. Boulware is the best lawyer and the best secretary in town. She has:
evaluate the marginal cost and marginal benefit of that decision
One of the first steps in deciding whether to complete your education is to:
natural resources
Resources provided by nature and used to produce goods and services are known as
Which is not a possible opportunity cost of attending college?
The cost of housing
smaller
The principle of increasing marginal opportunity cost states that the more resources devoted to any activity, the_________ the payoff to devoting additional resources to that activity
scarcity
The principle of opportunity cost evolves from the concept of
taking risks
The role of an entrepreneur always involves:
physical capital
The stock of computers, factory buildings and machine tools used to produce goods is known as
mixed economy
U.S. economy is best classified as a...
Protect intellectual property rights
What are copyrights designed to accomplish?
Opportunity Cost
What is the name given to the highest-valued alternative that must be given up to engage in any activity?
overall standards of living increase
When nations specialize in their comparative advantage and engage in trade:
a market
When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?
North Korea
Which of the following countries has an economy where most of the resource allocation is determined by a central planning authority?
To allow individuals or firms to have exclusive access to the use of their own property
Which of the following is critical to the success of the market system?
Invention
a name given to the development of an economic good
an import
a product produced in a foreign country and purchased by residents of the home country is called:
Economics
concerned with how people respond to incentives
marginal benefit is equal to marginal cost
economists believe that an individual or firm should continue any activity until...
Macroeconomics cannot be used to understand
how a consumer decides between the purchase of two different cars
According to the rationality assumption
people would not make decisions that would make them worse off
Macroeconomics is not concerned with...
political party affiliation
Economics is the study of choice under the conditions of...
scarcity
goods
tangible products like cars and television are known as