ECO 211 unit one Healy (1b, 1c, 2a,

8. The richest quintile (20%) of the US population receives about what percent of income? 10% 20% 30% 40% 50%

50%

Which of the following best describes the "invisible hand" concept? A.The desires of resource suppliers and producers to further their own self-interest will automatically further the public interest. B.The nonsubstitutability of resources creates a conflict between private and public interests and the need for government intervention. C.Mixed capitalism is the best system for overcoming the scarce resources-unlimited wants problem. D.Central direction by the government will improve resource allocation in a capitalistic economy.

A.The desires of resource suppliers and producers to further their own self-interest will automatically further the public interest.

The idea of allocative efficiency is concerned with: A.producing the combination of goods most desired by society. B.achieving the full employment of all available resources. C.producing every good with the least-cost combination of inputs. D.reducing the concavity of the production possibilities curve.

A.producing the combination of goods most desired by society.

"Productive efficiency" refers to: A.the use of the least-cost method of production. B.the production of the product-mix most wanted by society. C.the full employment of all available resources. D.production at some point inside of the production possibilities curve.

A.the use of the least-cost method of production.

Growth is advantageous to a nation because it: A.promotes faster population growth. B.lessens the burden of scarcity. C.eliminates the economizing problem. D.slows the growth of wants.

B.lessens the burden of scarcity.

The economizing problem is essentially one of deciding how to make the best use of: A.virtually unlimited resources to satisfy virtually unlimited wants. B.limited resources to satisfy virtually unlimited wants. C.unlimited resources to satisfy limited wants. D.limited resources to satisfy limited wants.

B.limited resources to satisfy virtually unlimited wants.

Which of the following is unique to capitalist ideology? A.the extensive use of capital goods B.private ownership of property resources C.specialization D.the use of money

B.private ownership of property resources

Competition means that: A.sellers can manipulate market price by causing product scarcities. B.there are large numbers of independently-acting buyers and sellers in each market. C.a product can be purchased at a number of different prices. D.there is more than one seller in a market.

B.there are large numbers of independently-acting buyers and sellers in each market.

In a competitive market economy firms will select the least-cost production technique because: A.such choices will result in the full employment of available resources. B.to do so will maximize firm profits. C.this will prevent new firms from entering the industry. D."dollar voting" by consumers mandates such a choice.

B.to do so will maximize firm profits.

7. What is the "Economic Problem" (sometimes called the "Economizing Problem")? The desire to achieve full employment. Getting a bigger boat for Mark. High inflation rates Because of scarcity we must make choices. The unequal distribution of income.

Because of scarcity we must make choices

The term "mixed economy" refers to an economy: A.comprised of both product and resource markets. B.which engages in both domestic and international trade. C.comprised of both extensive private markets and government involvement in the economy. D.which functions primarily on the basis of custom and tradition.

C.comprised of both extensive private markets and government involvement in the economy.

"Consumer sovereignty" refers to the: A.fact that resource prices are higher than product prices in capitalistic economies. B.idea that the pursuit of self-interest is in the public interest. C.idea that the decisions of producers and resource suppliers with respect to the kinds and amounts of goods produced must be appropriate to consumer demands. D.fact that a Federal agency exists to protect consumers from harmful and defective products.

C.idea that the decisions of producers and resource suppliers with respect to the kinds and amounts of goods produced must be appropriate to consumer demands.

The term "ceteris paribus" means: A.that if event A precedes event B, A has caused B. B.that economics deals with facts, not values. C.other things equal. D.prosperity inevitably follows recession.

C.other things equal

The fundamental problem of economics is: A.to establish a democratic political framework for the provision of social goods and services. B.the establishment of prices which accurately reflect the relative scarcities of products and resources. C.the scarcity of productive resources relative to material wants. D.to achieve a more equitable distribution of money income in order to mitigate poverty.

C.the scarcity of productive resources relative to material wants.

6. When the Coca-Cola company lays-off 6,000 employees, assuming that the quantity of soft drinks they produce does not decrease, may be considered GOOD for society because: Coca-Cola was not using resources where they were best suited Coca-Cola was using more resources then necessary Coca-Cola was not using the appropriate technology Coca-Cola is trying to achieve economic growth There is no way that this could be GOOD for society

Coca-Cola was using more resources then necessary

The Russian transition from a planned to a market economy has resulted in: A.the privatization of public property. B.business competition. C.the removal of price controls. D.all of the above.

D.all of the above.

According to official Census Bureau statistics, since 1969 the distribution of income has: A.remained virtually constant from year to year. B.become more equal. C.varied considerably from year to year but in general has been stable. D.become less equal.

D.become less equal.

Well-defined property rights are important because they: A.encourage investment and growth. B.are conducive to the writing of books and music. C.facilitate exchange. D.do all of the above.

D.do all of the above.

The competitive market system: A.encourages innovation because government provides tax breaks and subsidies to those who develop new products or new productive techniques. B.discourages innovation because it is difficult to acquire additional capital in the form of new machinery and equipment. C.discourages innovation because firms want to get all the profits possible from existing machinery and equipment. D.encourages innovation because successful innovators are rewarded with economic profits.

D.encourages innovation because successful innovators are rewarded with economic profits.

5. Which of the following is NOT one of the three choices available to a society to deal with scarcity? Economic Growth Limited resources Use existing resources wisely Reducing wants

Limited resources

2. The "E" that supports the concept of free trade is: Economic Growth Allocative Efficiency Productive efficiency Equity Full Employment

Productive efficiency

9. Secretaries should be typing letters and truck drivers should be driving trucks is an example of: Economic Growth Allocative Efficiency Productive efficiency Equity Full Employment

Productive efficiency

Economic theories: A.are useless because they are not based upon laboratory experimentation. B.which are true for individual economic units are never true for the economy as a whole. C.are generalizations based upon a careful observation of facts. D.are abstractions and therefore of no application to real situations.

are generalizations based upon a careful observation of facts

4. The economic principle that is used to explain how equity helps society achieve the maximum satisfaction possible from its limited resources is: the principle of comparative advantage the law of increasing costs economies of scale supply and demand the law of diminishing marginal utility

the law of diminishing marginal utility

3. Economic growth helps reduce scarcity by: using our resources to produce more of what people want using our resources to produce at a lower cost achieving a more equal distribution of income using new resources and better technology to produce more using all of our resources to produce as much as possible

using new resources and better technology to produce more

10. Using our resources to produce more sport utility vehicles and fewer small cars is an example of: Economic Growth Allocative Efficiency Productive efficiency Equity Full Employment

Allocative Efficiency

1. The price of plywood rising after a hurricane hits Florida is an example of which of the 5 Es? Economic Growth Allocative Efficiency Productive efficiency Equity Full Employment

Allocative efficiency

Which of the following is an example of a capital good. A.a Federal government bond. B.a share of General Motors stock C.a bag of potatoe chips D.a Boeing 757 airplane

D.a Boeing 757 airplane