quizz

Short Answer: In one sentence, define the term entrepreneur.

A person who takes a risk to produce and sell goods and services in search of profit.

Short Answer: In one sentence, define what the term good means in the context of economics.

A physical object that satisfies human wants.

Why did Smith believe that the division of labor was important to productivity?

Because if three people were each making their own nails, they would have to frequently switch tools and learn all the steps of making a nail, whereas if each person did a step of the nail, they wouldn't have to switch tools and they would only have to learn one step, making the process much faster.

Short Answer: In the Parable of the Talents in Matthew 25, why did the master punish one of his servants?

Because instead of investing his money and making more, he just buried it in the ground.

What does it mean to "truck, barter, and exchange?"

It means to trade ("I'll give you this if you give me that.")

Who has the most influence in a free-market economic system?

individuals

In the US economic system, who makes decisions?

individuals, businesses, government

In the Parable of the Talents in Matthew 25, the master rewarded the servants who had ____________ their money.

invest

Wood is an example of which type of resource?

natural

The second-best alternative we forego when making a choice is called ___________________.

opportunity cost

Which type of business organization has two or more owners that share all the risks and share all the profits?

partnership

Which of the following are characteristics of a free-market economy?

private ownership of property/resources & minimal government involvement in the economy

The combining of human, natural, capital, and entrepreneurial resources to make goods or provide services is called _____________.

production

What are the factors of production that are used to produce goods and services?

resources

Private financial institutions help facilitate an exchange of money between which two groups?

savers and borrowers

About three-quarters of all US businesses are _______________.

sole proprietorships

The government controls the means of production in which economic system?

command

In the early 1990s, PepsiCo introduced a new soda called Crystal Pepsi. Sales for Crystal Pepsi were low, so within a few years, PepsiCo stopped producing it. Which characteristic of the US economy is illustrated in this scenario?

consumer sovereignty

Which of the following is the best definition of economics?

the study of how people make choices in the face of scarcity

Which business type is authorized to operate as a legal person and limits its owners' risk to the amount of money they've invested?

corporation

In a traditional economy, economic decisions are based largely on _____________.

custom

In the US economy, buyers determine what is produced by the purchases they make. This is known as what?

customer sovereignty

How many attempts did it take for Milton Hershey to create a successful candy company?

three

Which of the following are reasons why nations and states trade?

to sell goods and services to other countries, to obtain goods and services they cannot produce or cannot produce efficiently themselves, to buy goods and services at a lower cost or a lower opportunity cost

What is consumption?

using goods and services

A person who takes risks to produce goods and services in search of profit is called a(n) ____________.

entrepreneur

The point where the supply and demand curves meet is called the _____________ price.

equilibrium

Jennifer has considered three different ways to spend her Saturday: go to the beach, start on her homework, or babysit to earn extra spending money. Although she enjoys the beach, Jennifer decides that it will be her third choice. She also decides that she will have plenty of time to do her homework on Sunday, so she makes that her second choice. Ultimately, she decides that babysitting is her best choice. In this scenario, what is the opportunity cost?

getting her homework done on Saturday

Command economies operate on the communist principles of ____________.

Karl Marx

Which statement best describes the relationship between supply and demand?

Price is determined when supply equals demand.

What are some of the divisions of labor that Smith describes in the linen and woolen industries?

The operator, the people who make the fibers into cloth, and the people who make the fabric into clothes.

Look at this passage in Chapter 2: "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages." According to Smith, why do we make certain economic decisions? Is this a good or a bad thing?

We make these economic decisions so not because the baker wants people to have bread but because if he sells them bread then he will have money to buy meat from the butcher.

Which of the following are questions a country must ask about its productive resources?

Who will be able to consume these goods and services? What will be produced? How will goods and services be produced?

When supply is high and demand is low, the price of an item will ______________.

be low

Why does the government provide public goods and services?

because individuals acting alone could not efficiently provide them for themselves

How do financial institutions encourage savings?

by paying interest