Economics - 2022 Semester 1 Exam Review
Which of the following places mixed economic systems in order from LEAST to MOST flexible?
Authoritarian Socialist, Democratic Socialist, Capitalist
"I received $600 from the government as a part of the government's stimulus package" best illustrates which of the following economic principles?
Governments can sometimes improve market outcomes
The dollar value of all final goods, services, and structures produced in a country in a year is known as_________________.
Gross domestic product
Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?
Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.
__________ is an increase in the overall average level of prices.
Inflation
Factors of production are________________.
Inputs into the production process.
What is the purpose of a PPF?
It identifies all possible combinations of goods and services an economy can produce at that moment.
In the mythical country of the United States of Neal O'Donnell, an entrepreneur has introduced a new technology that makes manufacturing twice as efficient as before. How is this likely to affect the PPF?
It would expand the frontier.
The basic difference between macroeconomics and microeconomics is that macroeconomics looks at the __________ , while microeconomics is concerned with the __________.
forest, individual trees
The three synonymous terms to describe the U.S. economic system are free enterprise, capitalism, and_______________.
free market
Money has value because of its ___________________.
general acceptability
A ______________ is a tangible item that give a person utility or satisfaction.
good
What are the factors of production?
land, labor, capital, entrepreneurship
What are the three basic questions that all societies face?
What to produce, how to produce, for whom to produce
Which branch of economics focuses on the individual parts of the economy?
microeconomics
A ________________ is a basic requirement for survival, such as food, clothing, and shelter.
need
What allows people to own and control their possessions as they see fit, as long as it does not interfere with the rights of others?
private property rights
The amount of output in a specific amount of time, typically one hour of a worker's time, with a given amount of resources is referred to as________________________.
productivity
What drives entrepreneurs to bring the factors of production together to take risks to produce a good or service?
profit motive
What drives people and organizations to improve their material well-being?
profit motive
A factory worker focusing on a particular activity or job is an example of________________.
specialization
Suppose that decrease in the price of X results in less of Y being sold. This would mean that X and Y are_________________.
substitute goods
Which of the following descriptions best explains the meaning of opportunity cost?
the cost of choosing one alternative over another
What factors make it possible for the economy to grow?
the introduction of new resources, advances in production technology, or increased productivity
The Law of Supply states that_____________.
the quantity supplied varies directly with its price
The opportunity cost of going to college is________________.
the value of the best opportunity a student gives up attending college
In the context of the production possibilities frontier, opportunity cost refers to____________________.
the value of the next best alternative
Which of the following is the goal of entrepreneurship?
to develop a new combination of the factors of production, thereby creating something of value
What gives people and businesses the opportunity to make their own decisions?
economic freedom
Why is the basic problem of economics, scarcity, a universal problem?
The basic problem of scarcity is always going to be a universal problem for all countries. It is like this because there will always be an opportunity cost of producing one thing over the other. This creates a lack of the amount of the item that was not chosen to be produced.
Which of the following is an example of movement along the demand curve?
The quantity of apples offered for sales increases as the price of apples rises.
What explains why products made under a command economy are more likely to be low quality?
The workers who make them have little incentive to make them well.
Which of these is an accurate statement about mixed economies today?
There are more mixed economies in the worls that any other kind.
What is the relationship between the price of an item and the quantity demanded?
There is an inverse relationship between the price of an item and the quantity demanded. As the price goes up the quantity demanded goes down and vice versa.
When deciding how to use resources, you need to evaluate the costs and benefits of each choice to decide which meets your criteria. These are called_______________.
Trade-offs
What market structure discourages new ideas and new ways of doing things?
Traditional
Which market structure has stagnation and lack of progress?
Traditional
Which market structure punishes people who act differently?
Traditional
Which market structure sets forth certain economic roles for all members of the community?
Traditional
A factory might improve efficiency by introducing a division of labor. True or False?
True
A supply curve is the upward-sloping line related price to quantity supplied. True or False?
True
Economic growth is an increase in a nation's output of goods and services over time. True or False?
True
Economics trains you to think in terms of alternatives. True or false?
True
Economists use models to simplify reality in order to improve our understanding of the world. True or False?
True
In a market economy, people and firms act in their own best interests to answer to WHAT, HOW, and FOR WHOM questions. True or False?
True
Labor is a resource that will vary in size over time. True or False?
True
Movement along a demand curve illustrates a change in quantity demanded. True or False?
True
Scarcity is an economic problem with which all societies are faced. True or False?
True
Socialist economies include aspects of both command and free-enterprise (market) systems. True or False
True
The fewer substitutes available for a product, the more inelastic the demand. True or False?
True
The word economy comes from a Greek word for "one who manages a household." True or False?
True
When the price is above the equilibrium price, the quantity supplied exceeds the quantity demanded. QS > QD. True or False?
True
The use of the smallest amount of resources to produce the greatest amount of output is________________.
efficiency
Because scarcity exists, _______________ have to be made.
choices
The struggle among sellers to attract customers by offering the best products available at the lowest prices is known as_________________.
competition
A demand schedule is best described as________________.
data
When the price of something increases, the quantity demanded______________.
decreases
An economist performs the total expenditures test and finds that a change in price and a change in revenue move in opposite directions and concludes that the test shows____________.
demand is elastic
As people use more and more of a product, they encounter_________________.
diminishing marginal utility
Why is the demand curve downward sloping?
diminishing marginal utility affects the quantity of the purchase
Arranging work so that workers do fewer tasks describes_________________.
division of labor
In which market structure do the leaders provide for themselves, usually at the expense of the people?
Command
What market structure provides little uncertainty over choice of career, where to work, or losing a job?
Command
What market structure provides many basic education and public health services available at little or no cost?
Command
Which market structure allows citizens access to goods that they normally could not afford?
Command
Which market structure has low quality goods?
Command
Which market structure requires a large bureaucracy, which consumes resources?
Command
What kind of economy offers uniformity in wages regardless of occupation or individual productivity?
Command and socialist economies
Define Economics.
Economics is the study of how society manages its scarce resources.
How are economic transactions shaped in a traditional economy?
Elders and ancestors make certain that things are done in specific ways.
Which of the factors of production involves taking risks and combining resources to produce a good or service?
Entrepreneurship
The study of economics involves___________________.
Explaining how people deal with scarcity, studying how things are made, bought, sold, and used, explaining how incomes are earned and how jobs are created.
A popular model used to illustrate the concept of opportunity cost is the circular-flow diagram. True or False?
False
A shift in the supply curve illustrates a change in quantity supplied. True or False?
False
Because of a modest price increase has little or no effect, the demand for the product is elastic. True or False?
False
Economic growth leads the production possibilities frontier to contract. True or False?
False
Economic growth usually can be achieved without investing in new resources. True or False?
False
In all societies, the government decides what to produce. True or False?
False
Mixed economies work to the degree that they embrace democracy. True or False?
False
Scarcity is caused by a shortage of money. True or False?
False
Scarcity is caused by a shortage of money.. True or False?
False
Societies embrace various economic systems to deal with the fundamental economic problem of utility. True or False
False - problem of scarcity
Which of the following examines the behavior of entire economies such as unemployment rates in individual countries?
Macroeconomics
All of the following are disadvantages of mixed economic systems EXCEPT
Many governments in communist and command economies are likely to see market-oriented reforms as a threat to their own leadership.
What market structure does not produce enough public goods such as defense, education, or health care.?
Market
What market structure has an incredible variety of goods and services?
Market
What market structure provides a high degree of consumer satisfaction?
Market
What market structure rewards only productive resources?
Market
Which market structure has decentralized decision making?
Market
Which market structure has privately-owned goods?
Market
Which market structure is able to adjust ti change gradually?
Market
Which of the following is the study of choices made by "smaller" participants such as households, companies, and individual markets?
Microeconomics
________________________ is the most valued alternative forfeited when a choice is made.
Opportunity cost
"Having more money to buy stuff requires working longer hours and missing out on fun events with friends" best illustrates which of the following economic principles?
People face tradeoffs
Which statement describes why a nation with a command economy might resist a shift to a free market economy?
People who hold political power are threatened by systematic changes.
"After WWI, Germany printed too much money, which made it worthless" best illustrates which of the following economic principles?
Prices rise when the government prints too much money
How is the principle of "There's No Such Thing As A Free Lunch" illustrated in a socialist economy
Socialist economies tend to offer extensive government services but have high taxes.
What occurs when price > equilibrium price, then quantity supplied > quantity demanded?
Surplus
A weaker demand together with a stronger supply would essentially result in______________.
a lower price
This is a way of organizing work so that each worker or work group completes a separate part of the overall task.
division of labor
The economic way of thinking involves thinking ___________________.
analytically and objectively
When two persons trade goods________________.
both persons usually gain from the exchange
When two persons trade goods___________________.
both persons usually gain from the exchange
The buildings, structures, machinery, and tools used in the production process are called?
capital goods
Which of these is a major advantage of a market economy?
high degree of consumer satisfaction
The PPF of a nation shows_____________.
how much production takes place with the existing resources
What motivates people to work, save, invest?
incentives
The Law of Demand states that the quantity demanded of a product varies ______________ with its price.
inversely
Division of labor is practiced because_____________________.
it increases efficiency by ensuring that workers become good at specific tasks
Division of labor is practiced because________________________.
it increases efficiency by ensuring that workers become good at specific tasks
A market demand curve shows the ______________________ by everyone who is interested purchasing a product at all possible prices.
quantities demanded
A decrease in product price will cause_______________.
quantity demanded to increase
Tuckers makes such great "Martell" burgers that customers do not respond much to a change in price. If the owner(s) of Tuckers is only interested in increasing revenue, he or she should________________.
raise the price of the "Martell" burger
Rapid and persistent inflation occurs mainly due to______________.
rapid increases in the quantity of money in the economy
The phenomenon of scarcity stems from the fact that____________________.
resources are limited
If the government limits the amount of beef that can be imported into the country, the price of beef will ___________, and the quantity of beef will _____________.
rise; fall
The fundamental economic problem facing all societies is_______________.
scarcity
If used clothing from Goodwill is considered an inferior good, an increase in consumer income will______________________.
shift the demand curve for clothing from Goodwill to the left
Government policies designed to promote efficiency,____________________.
usually do so at the expense of equity
Which of the following helps determine something's value?
utility and scarcity
The opportunity cost of an item is________________.
what you give up to get that item
Inflation causes people to _________________.
work more to pay for the basic necessities
Who did Karl Marx believe would benefit from socialism?
workers
