Economics Study Guide

Which of the economic systems described below are characteristic of a market economy?

An economic system based on the power of division of labor in which the prices of goods and services are determined in a free price system set by supply and demand.

Which of the following is NOT an example of labor at a car dealership?

Auto Buyer

If you were a teenager living in a country where the government told you what type of education you will receive, what your major would be in college and what job you would have, you would most likely live in which economic system?

Command

A new video game system is released just before Christmas, and everyone's "gotta have it." As parents race to the store to buy the system for their kids, the price throughout December holds steady at $349.99. What do you think will happen to the price in January? ...February? ...June?

Demand and price will likely decrease; that is, people who have bought the system don't need to buy it again, so fewer potential customers will remain during these months.

Stan Lee was an incredibly creative and artistic person who helped think up many superheroes such as Spider Man, Captain America, and Iron Man. His ideas were a major contributing factor the Marvel Universe and the many movies that have come from them. Which of the following Factors of Production would BEST FIT this description of Stan Lee

Entrepreneurship

Which of the following actions is an example of an improvement in worker knowledge?

Frank's Furniture trains employees to use computers.

A rice worker in a traditional economic system wants to increase productivity of the rice she picks per day. She has picked rice for 20 years the same way by picking a handful of rice, walking to the shore to drop off her handful of rice. She continues to do this over and over. Which of the following would MOST LIKELY help increase HER productivity?

Having something to put the rice in to keep from walking back to shore.

Which of the following occupations would be considered MOST specialized?

Heart Surgeon

Increased worker productivity MOST LIKELY means

Higher profits

The owners of Grass Cutters, a lawn-mowing service, decide to purchase four additional mowers because demand for their services is increasing. The owners make this decision projecting that the work produced, total costs, and total profit of their business will change in which of the following ways? Work produced------Total Costs-----Total profits

Increase ---- Increase----Increase

Which of the following would most likely reduce the nursing shortage reported in the headline?

Increasing the wage rate of nurses

In 1860, Great Britain was the world's largest producer of cotton material and 40% of their exports were cotton goods. Great Britain imported 75% of its raw cotton from the United States. This would be connected to which economic concept?

Interdependence

In Country A they have no sources of wood. Country A imports all its wood from wood-producing Country B. If wood production lowers in Country B due to a severe drought, which of the following is MOST LIKELY to occur in Country A?

Price to build a new house in Country A will increase as wood imports become more expensive

Mallory would like to participate on the academic team, play softball, and play in the school band. She does not have time to do all three things. In this scenario, Mallory's time is best related to which of the following principles of economics?

Scarcity

Which appears to provide the best opportunity for increases in productivity?

Technology

In 2010 the Deepwater Horizon, a BP oil rig in the Gulf of Mexico, exploded. The explosion lead to nearly 5 million barrels of oil leaking into the ocean. This environmental disaster required what kind of decision by the company executives related to the economic concept of scarcity?

The decision to take valuable productive resources (capital and human) and use them to clean the spill instead of using these same resources for increased production of oil.

Which of the following proves the economic concept of interdependence?

The fact that a Toyota Camry made in Georgetown KY has seats made in Kentucky, seatbelts made in Canada, and electronics made in Mexico.

The fact that the United States imports 65% of oil used, proves which economic idea?

The idea that the U.S. is interdependent of other countries for oil.

Japan sells cars to the United States, the United States exports high technology to Saudi Arabia, and Saudi Arabia exports oil to Japan. Which is a valid conclusion that can be drawn from this statement?

The nations of the world are economically interdependent

Local stores sell a fleece jacket for about $50. Sales of the jacket are good, but not great. However, consumers learn that most celebrities wears this jacket. What most likely will happen to the price of the jacket?

The price of the jacket will likely go up because the demand for the jacket should increase.

When a motorcycle manufacturer announces that it will no longer make its most popular model of bike. Since the supply will now be limited what do you think will happen to the price of the bike?

The price should go up.

Which of the following is an example of capital for a firm that produces wind‑powered electricity?

The windmill that produces the electrical power

Due to the fact that oil is a scarce natural resource, what decisions does this force all governments to make?

They must begin looking for alternative energy sources to replace oil.

Tim decides to quit his current job to open up a business on his own. In a Market Economic system what would be the biggest motivation for Tim to make this decision?

Tim's hope to make money / profits.

Which of the following best describes the primary role of an economic system?

To determine how resources are used and distributed.

If you live in a country where the economics are based upon the methods used generation after generation without changing the methods, you most likely would be living in which economic system?

Traditional

In every economic system, scarcity imposes limitations on

households, business firms, governments, and the nation as a whole

In France, a person drinks coffee imported from Brazil, works at a computer made in Japan, and uses gasoline from Saudi Arabia in a German automobile. This situation illustrates the concept of

interdependence.

When there is an improvement in technology, and everything else remains the same what will most likely be the result?

the output and profits of a business will increase.