Econ quiz notes

Suppose you have a $50 iTunes gift card with which you can download songs or videos . Songs cost $2 each and videos cost $4 each. What is the opportunity cost of one video ?

The opportunity cost of one video is equal to 2 songs

What are the 4 economic systems

Traditional ,market,command ,mixed

Scarcity

Unlimited wants but limited resources

Suppose the government passed a law taxing manufactures according to the amount of pollutants they released into the environment . This law would be an example of which regulatory function of the government ?

Regulate negative externalities

The basic economic condition that exists when unlimited wants exceed limited productive resources is called

Scarcity

What is Capital?

All structures and equipment involved in the manufacturing process

Functions the government performs

1) provide a legal system 2)provide public goods 3)market failures 4)maintain competition 5)redistribute income 6)stabilize the economy 7)externalities

Using the production possibilities curve/frontier shows?

1)how an economy could use their resources for products 2)trade offs 3)efficiency 4)lay offs 5) underutilization

An item that is scarce must be

1)limited in quantity 2) must be desirable 3)must have more than one valuable use

What are the two ideas of scarcity?

1)no limit to what we want 2) limit to the ability to produce goods and services

Productivity can be increased by

1)producing more goods and services with the same amount of resources , or 2)by producing the same amount of goods and services with fewer resources

What are the three economic questions

1)what goods and services should be produced ? 2)how should good and services be produced ? 3)who consumes goods and services

As a function of government in a market economy how might a government respond to a market failure

A government might intervene in the market to reestablish efficiency

Stabilize the economy example

Reducing unemployment and inflation. Also promoting economic growth

Adam smith belief

Believed in division of labor , workers skilled at a single job

What is entrepreneurship ?

Business (or person) taking the risk

Which of these best represents capital investment for a company?, a)advertising ,b)renting space ,c) buying new equipment ,d) hiring new employees

Buying new equipment

Which example of productive resources is matched correctly ?,a) land &surgeon ,b) capital &oil rig,c) labor & telephone wire, d)entrepreneurship &rice field

Capital & oil rig

What is opportunity cost

The next best alternative you give up in order to do something else

Provide public goods example

Goods and services that are not provided by individuals or private businesses

What might be the purpose of government regulation of natural monopolies , or economies of scale ?

Government regulation might be used to facilitate competition

What is labor ?

Human effort

Traditional economy

Is the way things have always been done,passed down from generation to generation

What do you mean by Natural resources

It's in its Natural state ,(water,timber , oxygen etc)

Provide a legal system example

Make and enforce laws to protect private property rights

Market failures example

Market failures occur when efficiency Is not met or marginal costs outweigh marginal benefits when producing a good

Economic efficiency

Means allocating scare productive resource to produce the goods and services that people want and using inputs in a manner that keeps production cost as low as possible

Economic freedom

Means allowing consumers to decide how to spend or save their incomes,allowing workers to change jobs and join unions and allowing individuals to establish new business and close old ones

Economic growth

Means increasing the production of goods and service over time economic growth is measured by changes in GDP

Economic stability

Means maintaining stable prices and full employment and keeping economic growth reasonably smooth and steady .

Economic security

Means protecting consumers,producers,and resource owners from risks that exist in society

Economic equity

Means what is fair. Equity issues often comes up when dealing with distribution and wealth. To some equity means providing equal opportunity .to others equity mean equality of income

In which kind of economy are prices determined by supply and demand and by government actions

Mixed

Mixed Economy

Mixture of command and market.within certain limits of the law we produce certain goods

What are two advantages that a market economy has over a mixed economy

More freedom and efficiency for producers and consumers

Production is classified in 4 types (or factors) ,what are they?

Natural resources (sometimes called land) Capital Labor Entrepreneurship

Productivity

Ratio of the amount of goods and services produced per unit of productive resources used

Scarcity is not the same as a __________?

Shortage

What is economics

Study of how individuals and nations make choices about how to use scarce resources

Redistribute income example

Taxing those with larger incomes and helping those in need

Command economy

The government regulates what is being made.consumers have no say

What is the opportunity cost of saving money to purchase a new car?

The money could be used to go on a vacation

Externalities example

When a third party other than the consumer and producer of a good is hurt or benefits from the production of a good.