ECON UNIT TEST

Suppose that you own a company that silkscreens t-shirts. The cost of producing one t-shirt image is $1.50. The revenue you earn on each t-shirt is $3.75. What is your profit per t-shirt?

$2.25

An economic system in which all resources are government-owned and all production is directed by the central plans of government is known as a

(Pure) Command Economy

Households typically try to increase their level of satisfaction, happiness, and sense of well-being. In other words, households try to maximize their

utility

The law of comparative advantage helps explain?

why a person talented in many things can get more done by SPECIALIZING

Laws that reduce anticompetitive behavior and promote competition in the marketplace where competition is desirable are known as

Antitrust Laws

Being able to make something using FEWER resources than other producers require would give you

Absolute Advantage

an example of a renewable resource is

TREES air

Which type of economy produces the highest standard of living for its citizens?

Market economy

Which of the following is NOT true of a pure market economy?

Markets are regulated by the government

By-products of production or consumption that impose costs on third parties

Negative externalities

Monetary policy involves

changes in the quantity of money. control of the money supply, involes MACROECONOMY

The intellectual property rights of a song writer are protected by a

copyright.

An individual who tries to earn a profit by developing a new product or finding a better way to produce an existing one is a

entrepreneur

Which of the following is a problem with pure command economies?

environmental damage

Suppose a steel factory pollutes the water that local residents inust drink, but the market price of steel fails to reflect such costs. Because the pollution costs are outside the market transaction, they are called

externality

Inputs used to create goods and services that people want are called

factor of production

Earned Income Tax Credit (EITC)

federal tax credits and cash payments for low-income workers. low income WORKERS

The most important economic decision-maker in market economies is

household

Which factor might best help an economy to grow?

labor force increases

Scarcity arises because all societies have

limited resources to satisfy unlimited wants

a study of total consumption in the US economy would involve

macroeconomics

Most economies today are:

mixed economies

The economy of the United States is best described as

mixed economy

an example of public good, in an economic context, is

national defense, flood control, street lights, roads, dams, lighthouses, autopsies

an example of an exhaustible resource is

oil coal

If U.S. production falls short of consumption, Americans buy the difference from

other countries

A public utility is

produces a good or service in the public interest. eg. water or electricity to consumers

In a market economy, what rights give resource owners the freedom to use their resources as they see fit?

property rights

Economics is the study of how

societies allocate goods for needs

The opportunity cost of a chosen item or activity is

the value of the best alternative you must pass up