Unit 1 Economic Review

What are three goals of macroeconomics?

Growth in the standard of living, low unemployment, and low inflation.

What is globalization? How do you think it might have affected the economy over the past decade?

It is the expanding cultural, political, and economic connections between people around the world. The increased buying and selling of goods, services, and assets across national borders.

Give three reasons why the division of labor increases an economy's level of production.

• A particular small job allows workers to focus on parts of the production process where they have an advantage. • Workers who specialize in certain tasks often learn to produce more quickly and with higher quality. • It allows businesses to take advantage of economies of scale.

What are three reasons to study economics

• Virtually every major problem facing the world today has an economic dimension. • It is hard to overstate the importance of economics to good citizenship. • A basic understanding of economics makes you a well-rounded thinker.

Residents of the town of Smithfield like to consume hams, but each ham requires 10 people to produce it and takes a month. If the town has a total of 100 people, what is the maximum amount of ham the residents can consume in a month?

100 people would produce 10 hams a month.

The chapter defines private enterprise as a characteristic of market-oriented economies. What would public enterprise be?

A public enterprise is a business organization wholly or partly owned by the state and controlled through a public authority.

Why might Belgium, France, Italy, and Sweden have a higher export to GDP ratio than the United States?

Even though they are small countries, they export a higher ratio of goods and services rather than the U.S.

Are firms primarily the buyers or the sellers in the goods and services market? Are firms usually the buyers of the sellers in the labor market?

Firms are primarily the sellers in the goods and services market, while they are the buyers in the labor market.

Are households primarily buyers or sellers in the goods and services market? (Think of households as another word for families, are families usually the ones buying products or the ones selling products) What about the labor market?

Households are mainly the buyers when it comes to the goods and services market, while they are the sellers in the labor market because they are basically selling themselves to companies in order to get paid.

A computer systems engineer could paint his house, but it makes more sense for him to hire a painter to do it. Explain why.

If the computer systems engineer hired a painter to paint his house, the painter would do a more professional job rather than the computer systems engineer because if he painted his own house without hiring the painter, it wouldn't look as professional.

Suppose you have a team of two workers: one is a baker and one is a chef. Explain why the kitchen can produce more meals in a given period of time if each worker specializes in what they do best than if workers try to do everything from appetizer to desert.

It could be done faster if the good or service is produced is divided into a number of tasks that are performed by different workers, rather all the tasks being done by the same person.

A consultant works for $200 per hour. She likes to eat vegetables, but is not very good at growing them. Why does it make more economic sense for her to spend her time at the consulting job and shop for her vegetables?

It would make more sense for her to spend her time at the consulting job because then, the consultant would have enough money to buy the vegetables that the consultant needs instead of growing them.

What is the difference between microeconomics and macroeconomics?

Macroeconomics looks at the economy as a whole, while microeconomics focuses on different agencies of the economy.

What is scarcity? Can you think of two causes of scarcity?

Scarcity means that human wants for goods, services and resources exceed what is available. A rapid increase in demand and a rapid decrease in supply.

Why would division of labor without trade not work?

There will not be a comparative advantage.

What are the three ways that societies can organize themselves economically?

Traditional economy, command economy, and market economy.