HW 1 Chapter 1

The book Wealth of Nations was written by Adam Smith in 1776. John Maynard Keynes in 1776. Adam Smith in 1936. John Maynard Keynes in 1936.

Adam Smith in 1776.

The fact that there are too few resources to satisfy all our wants is attributed to Scarcity. Greed. Shortages. Lack of money.

Scarcity.

Adam Smith's invisible hand is now called Economic growth. The market mechanism.' Opportunity cost. Laissez faire.

The market mechanism.

Opportunity cost is Measured only in dollars and cents. The total dollar cost to society of producing the goods. The difficulty associated with using one good in place of another. What is given up in order to get something else.

What is given up in order to get something else.

Which of the following is not one of the three core economic issues that must be resolved? How to produce the goods and services we select. What to produce with unlimited resources. Who should get the goods and services we produce. What to produce with limited resources.

What to produce with unlimited resources.

In a market economy, the people who receive the goods and services that are produced are those who Need the goods and services the most. Have the most political power. Want the goods and services the most. Are willing to pay the highest price.

Are willing to pay the highest price.

The role of the entrepreneur in an economy is to Bring the factors of production together and assume the risk of production Work with government planners to determine what goods are produced. Arrange bank financing for the owners of new businesses. Ensure full employment of labor.

Bring the factors of production together and assume the risk of production.

A consequence of the economic problem of scarcity is that Choices have to be made about how resources are used. There is never too much of any good or service produced. The production of goods and services must be controlled by the government. The production possibilities curve is bowed outward.

Choices have to be made about how resources are used.

Capital, as economists use the term, refers to The cash needed to start a new business. The costs of operating a business. Shares of stock issued by businesses. Final goods that are used to produce other goods and services.

Final goods that are used to produce other goods and services.

The basic factors of production include Land, labor, money, and capital. Land, labor, money, and inputs .Labor and money. Land, labor, capital, and entrepreneurship.

Land, labor, capital, and entrepreneurship.

The doctrine of laissez faire is based on the belief that Markets are likely to do a better job of allocating resources than government directives. Government directives are likely to do a better job of allocating resources than markets. Government failure does not exist. Markets result in an unfair distribution of income.

Markets are likely to do a better job of allocating resources than government directives.

Given that resources are scarce, A "free lunch" is possible, but only for a limited number of people .Opportunity costs are experienced whenever choices are made. Poor countries must make choices, but rich countries with abundant resources do not have to make choices. Some choices involve opportunity costs while other choices do not.

Opportunity costs are experienced whenever choices are made.

The Latin phrase ceteris paribus means The production possibilities curve never shifts. Laissez faire. Other things remain equal. The invisible hand.

Other things remain equal.

According to the text, there is no such thing as a free lunch because The producer must charge something to cover the cost of production. Resources used to produce the lunch could be used to produce other goods and services. The government must raise taxes to pay for the lunches .No one would pay for lunch anymore if they could get it for free.

Resources used to produce the lunch could be used to produce other goods and services.

Which of the following is not a basic decision that all nations must confront? Should we have economic growth? How should we produce goods and services? For whom should goods and services be produced? What goods and services should we produce?

Should we have economic growth?

Which of the following is not a factor of production? A psychiatrist. The $100,000 cash. A bulldozer. Six thousand acres of farmland.

The $100,000 cash.

The invisible hand refers to Intervention in the economy by the government bureaucrats we do not see and over whom we have no control. Undiscovered natural resources. The allocation of resources by market forces. The person who has the responsibility to coordinate all the markets in a market economy.

The allocation of resources by market forces.

Macroeconomics focuses on the performance of Individual consumers. Government agencies. The overall economy. All of the choices are correct.

The overall economy.

The fundamental problem of economics is The law of increasing opportunity costs. The scarcity of resources relative to human wants. How to get government to operate efficiently. How to create employment for everyone.

The scarcity of resources relative to human wants.

A mixed economy Is justified by the superiority of laissez faire over government intervention. Utilizes both market and nonmarket signals to allocate goods and services. Relies on the use of central planning by private firms rather than the government. Is one that allows trade with other countries.

Utilizes both market and nonmarket signals to allocate goods and services.

The market mechanism Is not a very efficient means of communicating consumer demand to the producers of goods and services. Works through central planning by government. Eliminates market failures created by government. Works because prices serve as a means of communication between consumers and producers.

Works because prices serve as a means of communication between consumers and producers.