Economics Unit 1 test

Kris has two choices for a part-time job after school. Kris could make $10 per hour entering data for a local company, but none of his friends work there. The second job offer pays $8 per hour at a local restaurant, and many of his friends work there. If Kris works 20 hours per week, what would be the weekly opportunity cost of accepting the job at the restaurant?

$40; Opportunity cost is the cost of the next best use of time or money when one alternative is chosen over another. If Kris works 20 hours per week, the weekly opportunity cost of accepting the job at the restaurant would be $40. Why? The restaurant job would earn Kris $160 for working 20 hours per week. Over that same time period, the data job would have netted Kris $200. Therefore, the $40 difference is the opportunity cost.

An increase in the capital utilized in the production process leads to what?

An increase in workers' productivity;An increase in workers' productivity is the expected outcome when capital is used to increase the production process. Capital investment is used to help increase production.

Using this diagram, what outcome can be predicted if individuals stopped purchasing goods?

Businesses would experience all of these economic outcomes; The "circular flow" diagram shows that all aspects of the economy are related. Therefore, if consumers stopped purchasing goods, businesses would produce fewer goods, lose income, and not be able to pay for resources. In other words, businesses would experience all of these economic outcomes.

"1952: With help from family, friends and the bank, the Herrs bought 37 acres and built a new 4,500 square-foot plant. Jim Herr equipped the new plant with the company's first automated cooker, an early example of the company's commitment to innovation and quality. From the beginning, Jim Herr adhered to his underlying business philosophy of providing quality products at competitive prices and backing them up with honesty and dependable service." How would equipping the first automated cooker be an example of commitment to innovation and quality?

By adding the automated cooker, Jim Herr could allocate resources, like labor, more efficiently in other areas of production of potato chips.

Explain how trade could be responsible for the change in the production possibilities curve shown above.

Canada increased imports of resources used in the production of both consumer and capital goods; The production possibilities curve (PPC) shifts outward due to increased technology, resources (factors of production), or trade. Countries can trade with one another for resources that it needs to produce goods. When a country imports, it brings goods or resources into its country. Here, Canada increased imports of resources used in the production of both consumer and capital goods , which would cause Canada's PPC to shift outward.

The government passed a major corporate tax cut, which allowed Albert's Bookstore to invest the savings in taxes back into its business. The Board voted to give all salary employees a 10% raise. Use the chart to explain the opportunity cost of the Board's decision.

Construction of new Macon, Ga. location; The best choice was construction of new Macon, Ga. location. Because the votes for this choice were the next highest, this would be the opportunity cost. Opportunity Cost is the next best choice in a group of trade offs

How do individuals contribute to the circular flow of economic activity?

Individuals provide labor for factor markets and buy goods in product markets.Businesses do get productive resources, but not in product markets.

Despite having one of the largest economies in the world (based on nominal GDP) what problem faces Japan that could affect its economic growth?

It has a very limited supply of natural resources; Japan has a land area of under 50,000 square miles, which is slightly smaller than that of the state of California. This lack of land means that it has a very limited supply of natural resources and must import much of the raw goods it need for industrial production. Because of the treaty that ended World War II, Japan still does not have a significant military.

The diagram shows the circular flow of goods and resources. What is the primary purpose of this chart?

It shows how households and businesses interact in a market economy.

Imagine that a company decides to try a new form of online marketing and advertising. What is the MOST likely impact this will have on production?

It will have no impact on production; Forms of advertising and marketing will not necessarily have any impact on production. If, however, consumers begin to demand more- or less- of the product because of the change, then there will be an increase- or decrease- in production.

A production possibilities curve- seen here- assumes which of these?

Scarcity requires economic choices; A production possibilities curve assumes- correctly- that scarcity requires economic choices. This, of course, is a fundamental concept of economics.

In what way does specialization increase productivity?

Specialization reduces the cost of production; For example, a specialized worker has a higher output without increasing the amount of labor required, therefore reducing labor costs.

During World War II, what was an opportunity cost of the decision to increase production of military goods?

The amount of consumer goods was reduced; When the United States decided to increase production of military goods,The amount of consumer goods was reduced.This is an example of an opportunity cost. The United States did not have the resources to make all consumer and military goods, so they had to choose. The option they did not choose, consumer goods, was the opportunity cost.

Why do command economies believe that an authoritarian system is more efficient than the price system for allocating scarce resources?

The price system is not a more efficient system for allocation of goods and services and the government is a fair and impartial distribution center to help ensure economic equity; Efficiency may not be the final goal, but the government, under authoritarian control, can make sure that goods and services are distributed in a fair and equitable manner

If a new machine was developed that picked coffee beans twice as fast as is currently possible, what would you expect to happen to the price of coffee?

The price would decrease because there would be more coffee available; The price would decrease because there would be more coffee available.

How might the development of the internet increase productivity?

The products of the business will be well known; The development of the internet might increase productivity because businesses have greater access to resources, which increases productivity efficiency. Although the internet can help products to become more well known, that increases sales, not productivity. Workers accessing social networking sites at work can actually decrease productivity.

What is the best example of a scarce resource found in more developed countries

Time; people do not take time to go down to the river to get water because it is faster for them to pay for service that would not be provided in a third world.

What type of economic system is described? -Producers and consumers own the factors of production -Custom and habit answer the question of who, what and how to produce -Outside trade and commerce is discouraged -Roles within the community are defined by custom and gender

Traditional; Traditional economies are successful if all needs are met within the community.

Senator English Touts Tax Bills Aimed to Blunt Impact of Slowing EconomyJanuary 24, 2008 The Job Creation Economic Stimulus Act of 2008, components of which have received broad support from the business community, provides tax incentives for employers to make capital investments. Expensing allows companies to deduct from their taxes the cost of purchasing equipment or other capital investment. This has the added benefit of making capital equipment more affordable, meaning that for some companies expensing means the difference between being able to afford new equipment or not. Expensing is a proven vehicle for injecting money into the economy, offers the most bang-for-the-buck, and often attracts bipartisan support. Under the English plan, employers could recover up to 100 percent of their capital investment if they purchase and place in service "high productivity" equipment, such as computers or high technology medical devices, among others, before January 1, 2009. How will the Senator's plan spur economic growth?

Using tax breaks will allow businesses to upgrade outdated equipment.

Which of the four fundamental questions relates most directly to consumer sovereignty?

What goods and services will be produced?; The idea of consumer sovereignty means that the consumer is in charge. This means that decisions on production should take into account the consumer's actions before anything else. This means the first question that must be answered is "What goods and services will be produced?". This is because consumers will only buy goods they want or need, so their needs should be addressed.

What is the opportunity cost of attending technical school versus attending a 4-year college or university?

a broad education as opposed to learning a working trade; A broad education as opposed to learning a working trade. When you attend technical school, you obtain an education that is very directed towards a specific skill or job set. You give up the opportunity to study various disciplines, such as Literature, Science, etc.

Based on the U.S. Census information in the graph,

annual earnings have a generally positive correlation with educational attainment.

In capitalist economies, prices are

determined by supply and demand.

The graph is a production possibilities chart. Which of these would be MOST likely to cause the line to move to the right?

improved technology in whoopee cushion production

Which of these BEST describes an investment in human capital?

improving access to public libraries; . This would provide more citizens with access to educational materials.

The diagram shows the circular flow of goods and resources in a market economy. According to this diagram, where do individuals sell their labor?

in the factor market; sometimes called the "resource market"- individuals (households) sell their labor (one of the factors of production). Businesses exchange money (income) for this labor.

Which of these would be the LEAST LIKELY to increase human capital?

increasing the cost of tuition at public colleges; The option that would be the LEAST LIKELY to increase human capital would be increasing the cost of tuition at public colleges. This would make it more difficult for families to send their children to college, thus hindering their ability to obtain a postsecondary education.

When a society invest in education how is it improving it's productivity

investing in human capital; investing in education improves productivity by investing human capital. Human capital represents skills that population brings to work force. By investing in education a society improving those skills. More skilled workforce is more productive.

Acme Furniture Manufacturers has just purchased a large supply of exotic lumber that is ready for use in their new line of furniture. This purchase BEST represents which of the factors of production?

land

Although specialization increases productivity, one disadvantage is

loss of flexibility among workers; Because workers are trained in one job, they are often unable to assume the duties of other workers without additional training.

Freedom to own the factors of production, subsidized transportation services, and involuntary spending and investments are all examples of

mixed economies; The subsidized services are an example of a command economy, the freedom to own productive resources is a market example, and the involuntary spending is found in a traditional economy.

When the amount of output produced by a given amount of inputs increases, the MOST LIKELY result is

overall productivity rises.

Taking into consideration the correct answer from the previous question, which of these is another example of that market?

steel for automobiles; Steel for automobiles would be an example of a "factor/resource market." This is the market that produces raw materials for use in the product market. The other answers are examples of the "product market."