Economics Online

Effective decision-making means comparing the additional costs of alternatives with the _____ .

marginal benefits

Business employees calculated that the expense to produce an additional cell phone is $50. This monetary amount represents a _____

marginal cost

The expense of making an additional shirt is known as the _____ .

marginal cost

Rockin' Radio has one hundred percent of the market share in the music industry. This means that this music business also has a lot of _____.

market power

oligopoly

market structure with a few sellers who produce either identical or differentiated products

monopoly

market structure with a single seller who produces a product with no close substitutes

monopolistic competition

market structure with large number of sellers who produce differentiated products

monopoly

market structure with one single seller, who produces a good or service with no close substitutes

Gross National Product (GNP)

market value, in dollar amounts, of all final goods and services produced by domestically owned factors of production

Gross Domestic Product (GDP)

market value, in dollar amounts, of all final goods and services produced within a country's borders; includes net exports - the dollar amount of exports minus the dollar amount of imports.

interrelated markets

markets that are connected in a mutual way

Select the items below that describe rational behavior in economics.

maximizes benefits makes a decision given certain conditions applies to both consumers and producers depends on the individual

rent control

maximum amount that a property owner can charge a renter

When you use paper money to pay for food, the money is a _____.

medium of exchange

What is the study of weather is called?

meteorology

grant

monetary aid given by another organization (such as the government or corporations)

price

monetary cost of an item

When the Federal Reserve influences the growth of the money supply, it is carrying out _________.

monetary policy

Select all the items that producers use to make goods and services.

money natural resources human resources capital goods

income

money earned

commission

money earned as a percentage of sales revenue

total income

money earned from all producers in a country

marginal revenue

money earned from producing an extra unit of output

revenue

money earned from selling a good or service

return

money earned on an investment

Open-market operations are when the Federal Reserve buys and sells securities to influence the _____.

money supply

personal income

money that a person has to buy goods and services

unemployment insurance

money that the government gives to unemployed people who meet certain requirements

loan

money to be paid back under certain terms

capital

money used for an economic purpose, such as investment

financial capital

money used for investments

retail price

money value of a good or service that is charged to the customer

The ice cream market is an example of _____ because it has many sellers who offer differentiated products.

monopolistic competition

Select the kinds of market structures in which sellers have some (including complete) control over price.

monopoly monopolistic competition oligopoly

A medical term for measles is _____.

morbilli rubeola

During periods of economic growth, an increase in consumption causes companies to make_____ goods and services.

more

When the economy is growing, producers are making _____ goods and services.

more

excess demand

more demand than needed

Select the items that can help you earn higher wages.

more education more training more skills

Select the items that describe potential benefits of providing intellectual property rights.

more innovations more economic growth more job opportunities more sales to other countries

If the marginal benefit of an activity is greater than its marginal cost, people are better off doing _____ .

more of the activity

Supporters of minimum wage believe that it provides _____.

more personal income

excess supply

more supply than needed

When people buy something, they value it ______ than it costs them. But, when people sell something, they value it _______ than the payment they receive.

more; less

________ productive workers are likely to be of greater value and earn higher wages than ________ productive workers.

more; less

Joshua pays a higher concert ticket price than Raffi because Joshua buys his ticket on the day of the concert. This is an example of _____.

price discrimination

Minimum wage and farming price control are examples of _____.

price floors

wage

price of labor, often given on an hourly, daily, or weekly basis

salary

price of labor, usually expressed on a yearly basis

interest

price of money borrowed or saved

interest rate

price of money that is borrowed or saved

Externalities distort _____ by not reflecting the true costs and benefits of producing a good or service.

price signals

A person who charges a price that is determined by buying and sales decisions is a _____.

price taker

A supply curve for the car industry would show the quantity of cars supplied at different _____.

prices

relative prices

prices of a good or service compared to the prices of another product

property rights

privileges of deciding how resources are used

collective bargaining

process of negotiating work-related terms between workers' representatives and businesses

Select the situation that describes an efficient use of resources.

producing the same number of cell phones that consumers demand

material goods

products that are bought and sold, including food, clothes, computers, and cars

profit maximization

profit level that earns the most money after expenses are paid

A monopolist's goal is to maximize _____.

profits

What is the main character in a short story called?

protagonist

The government imposes regulations that reduce pollution. Its incentive is to _____.

protect the environment

The government wants to ensure that emergency exits are accessible in office buildings. Its incentive is to _____.

provide safe workplaces

Select the items that describe how the government is involved in the economy.

provides public goods collects taxes enforces antitrust laws imposes price floors and ceilings carries out fiscal policy

human capital

quality of labor resources

Human Development Index (HDI)

quality of life measurement that includes form of GDP per capita, how long people are expected to live, and education

human resource

quantity and quality of human effort used for production of goods and services

supply

quantity of a good or service that producers make and sell in the market

Gross Domestic Product that is adjusted for price changes is called _____.

real Gross Domestic Product

Maximizing satisfaction means ________.

receiving the most benefits, with relatively few costs

rational behavior

receiving the most satisfaction, under certain conditions

Suppose adding cameras to cell phones caused the demand for cell phones to increase. As a result of this investment, cell phone producers sold more cell phones and earned more revenue. This investment most likely also _____ opportunities in the digital camera industry.

reduced

When Edison Electric Company and the Thomson-Houston Electric Company engaged in collusion, the two companies _______ the level of competition in their industry.

reduced

metamorphic

referring to a pronounced change caused by pressure, heat, and water that results in a more compact and more highly crystalline condition

Governments use _____ to make companies take responsibility for unintended effects.

regulations

monetary

relating to money

Select the items below that describe natural resources.

renewable or nonrenewable come from nature include minerals, air, and sunlight used in everything that we make

Select the items that are kinds of price controls.

rent control minimum wage

Governments cannot produce enough goods and services to satisfy everyone's wants because _____ .

resources are scarce

A person who owns a bakery figured out that cookies were selling better than brownies. So she took the resources that she was using to make the brownies and allocated them to making more cookies. This can happen because _____ .

resources can be used to make different goods and services

rational thinking

to consider something in a logical way

distribute

to divide among

barter

to exchange goods and services without the use of money

trade

to exchange goods and services, with or without the use of money

prefer

to like one thing better than another

A cost-benefit analysis is a way _____.

to make a decision using a rational approach

invent

to make a new product

maximize

to receive the most from

conserve

to save

exchange

to trade, or a market where buyers and sellers interact

national debt

total amount of money the federal government owes

net benefit

total benefit minus total cost

law of downward-sloping demand

when a product's price rises, the quantity of the product demanded decreases, and when a product's price falls, the quantity of the product demanded increases

innovation

when an invention becomes usable in a way that has economic value

shortage

when buyers want to purchase more than the producers want to sell at the given price

peer pressure

when friends influence people to behave in a certain way

imperfect competition

when individual sellers have some control over the price of a product in a market

economic specialization

when people concentrate their production on fewer kinds of goods and services than they consume

wage discrimination

when people receive different wages based on factors such as race and gender

price discrimination

when producers sell identical goods or services to different buyers at different prices

surplus

when producers want to sell more than buyers want to purchase at the given price

monetary policy

when the central bank uses money supply and interest rates to affect a country's economy; the influence of the central bank on the growth of the money supply

fiscal policy

when the government uses government spending and taxes to affect economic performance; decisions to change spending or tax levels by the federal government

division of labor

when the production of a good or service is broken down into several separate tasks, with different people performing each task

Jerry's Phone Service is a monopoly. Select the items that describe the price and quantity chosen by Jerry.

will maximize profits will cause shortage of goods

voluntary

willing

demand

willing and able to consume

trademark

word(s), symbol, or design that identifies a certain good or service

employee

worker

natural monopoly

business that has large economies of scale and can make a product more efficiently than other sellers

consumption

buying of final goods and services by households

Select the items that support the statement: Consumer preferences affect how producers make goods.

buying organic products and non-GMO foods purchasing products made from recycled materials consuming food made in a fair trade way

Select all the items that describe incentives.

can be positive or negative can be monetary or non-monetary can change affect people's choices and behavior

Select all the items that describe an entrepreneur.

can invent new products can start new businesses takes on risks can create jobs

Corporations have more ways to raise _______ to pay for productive resources than small firms or not-for-profit organizations.

capital

A machine that is used to print newspapers is a _____.

capital good

Select the items that describe antitrust laws.

created to prevent monopolies intended to promote competition can have unintended consequences

Heterotropia is _____.

cross-eyes

Economic growth may cause _____ unemployment to decrease, but it may also cause a rise in the prices of commonly used goods and services, known as _____.

cyclical, inflation

The federal government spends most of its money on _____, lays out the most money for the transfer program _____, and receives a large part of its revenue from _____.

national defense, Social Security, personal incomes taxes

Entrepreneurs and other sellers ________ when buyers purchase the product they sell at prices more than high enough to cover the costs of production.

earn profits

Select the items that describe labor.

earns wages or salaries a human resource and factor of production used to produce goods and services includes teachers, pilots, and doctors

Select the items that describe the benefits of coins and paper money.

easy to carry valuable easily divisible

During a period of _____, real GDP per capita can increase.

economic growth

planned economy

economy in which a central authority owns productive resources and distributes goods and services

market economy

economy in which market forces determine prices of resources and the prices and distribution of goods and services

free market economy

economy where goods, services, and resources are distributed by price

command economy

economy where goods, services, and resources are distributed by the government

Factors that improve human capital and can increase labor productivity include choosing a career, training, and _____.

education

Other standard of living measurements besides real GDP per capita may include _____.

education

consequence

effect

final goods and services

end products of the production process

The government defines, establishes, and _________ property rights.

enforces

The Federal Reserve helps protect people who borrow money to pay an expense by _____.

enforcing the Truth in Lending Act

At a price of $65, consumers demand 650 pairs of shoes, and sellers supply 650 pairs of shoes. The price of $65 (where quantity supplied and quantity demanded both equal 650 pairs of shoes) is the _____.

equilibrium price

In a free market economy, the decisions made by buyers and sellers push the price of a good or service toward the _____.

equilibrium price

Market pressures tend to move prices toward a(n) _____.

equilibrium price

A more polite term used to replace an objectionable one is called a(n) _____.

euphemism

Select a form of money not used in the United States.

euros

At a price of $50, consumers demand 1,000 pair of shoes, and sellers supply 500 pairs of shoes. At $50, there is _____.

excess demand (demand is greater than supply)

At a price of $100, consumers demand 450 pairs of shoes, and sellers supply 800 pairs of shoes. At $100, there is _____.

excess supply (supply is greater than demand)

Money encourages specialization by decreasing the ________.

exchange costs

input costs

expenses of productive resources

net exports

exports minus imports

Pollution from a factory that produces cleaning products is a(n) _____.

externality

marginal

extra or additional (in economics)

natural resource

factors derived from nature that are used to achieve a goal

Productive resources are _____.

factors that are used to make goods and services

productive resource

factors used to achieve a goal (ex: land, cotton plants, people, and machines)

Select the items that describe possible effects of incentives for political leaders.

favor programs with immediate benefits provide policies whose costs outweigh the benefits

taxes

fees that the government charges on products, activities, or income

Select the items that apply to calculating the Gross Domestic Product.

final goods and services new products

depository institutions

financial institutions whose funds come mainly from deposits

specialization

focusing on one area

Select the items counted in U.S. Gross National Product.

food from an American-owned restaurant in Chicago clothes from an American-owned store in London

Phil wanted the computer that Amy had, so he just took it. This is an example of distribution by _____ .

force

sedimentary

formed by or from deposits of sediment

igneous

formed by solidification of molten magma

Select all the items that describe a free market economy.

freedom for consumers and producers competition between businesses distribution by price motivated by self-interest

Suppose you were hired to calculate the Gross Domestic Product (GDP) by using the expenditure approach. You would count buying a new house as _____.

investment

Adam Smith called the force that guided the competition for scarce resources in a free market the ________ hand.

invisible

Select the items below that describe the field of economics.

is a social science. focuses on decision making. involves consumers and producers.

The interaction between buyers and sellers in the marketplace leads to goods and services being distributed by _____.

price

equilibrium price

price at which quantity supplied equals quantity demanded

market-clearing price

price at which quantity supplied equals quantity demanded (also known as the equilibrium price)

For several years in the late twentieth century, the government set the price of gasoline below the equilibrium price. This is an example of a _____.

price ceiling

copyright

sole right to publish or sell a form of artistic work

personal income tax

tax paid by individuals on money they earn

The two main sources of government revenue are __________

taxes and borrowing

expectations

things that are anticipated will happen

Select the items below that are examples of goods.

a two-bedroom house a sports car a pair of shoes

barometer

an instrument for measuring air pressure

value

an item's worth

Preferences _____.

are based on the individual

You are running a business, and each good that you produce costs $1.50. In order to earn a profit, you could choose a price of _____ for your product.

$2.00

If you earned $10 per hour and worked 40 hours a week, your gross pay would be _____.

$400

economic cycle

- Growing > Total output increasing > Total income increasing - Peak > Total output hits its highest level of the economic cycle > Total income hits its highest level of the economic cycle - Shrinking > Total output decreasing > Total income decreasing - Trough (Bottom) > Total output hits its lowest level of the economic cycle > Total income hits its lowest level of the economic cycle

Real GDP shows changes in GDP and changes in prices, but nominal GDP shows only changes in GDP. So you would use real GDP to accurately find out if GDP increased 2011.

--

Steps for a monopolist in choosing quantity and price:

-Find the point at which marginal revenue equals marginal cost. -Choose the quantity at which marginal revenue equals marginal cost. -Look at the demand for the product, using a demand table or demand curve. -Find the price that matches the quantity you chose on the demand table or demand curve. -Select this price and quantity pair.

Command Economy

-Government allocates resources and distributes goods and services. -Limited freedom for consumers and producers -Little (to no) competition among businesses -Small selection of goods and services -Inefficient market system

Free Market Economy

-Price allocates resources and distributes goods and services. -A lot of freedom for consumers and producers -Competition among businesses -Large selection of goods and services -Efficient market system

Summing It Up: Being at Equilibrium Means:

-Producers supply enough goods and services for consumers. -Producers earn revenue that is used to cover costs. -Consumers have enough goods and services at the given price. -There are no shortages or surpluses. -Producers are using their resources efficiently. -Markets and the whole economy are functioning more efficiently.

Select the statements that are true.

-The amount of one currency that can be traded for a unit of another currency is the exchange rate. -Many exchange rates float, or constantly change. -It is best to travel abroad when the exchange rate gets you more units of a foreign currency. -Units of currency from different countries have the same value.

Select all the items that describe a command economy.

-allocation of resources and distribution by the government (the central authority) -poor selection of goods and services -shortage of goods -limited freedom for both consumers and producers -governments strive for equal pay little to no competition between businesses

An increase in GDP means:

-consumers are buying more goods and services and spending more money -producers are making and selling more goods and services -producers are earning more money and making more investments -more jobs are created, and more people are working

In 2-3 sentences, list the three steps for effective decision-making using marginal analysis.

-figure out the marginal cost and marginal benefit of your choice -determined which is greater; the marginal cost or the marginal benefit -if the marginal cost is greater, then do not add the additional unit. if the marginal benefit is greater, then add the additional unit

perfect competition

-market structure with many sellers who produce identical products -price takers -open entry and exit

Select all the choices that decision makers could use marginal analysis for to make effective decisions.

-producing another car -consuming one more slice of pizza -adding a machine to the factory -buying an extra concert ticket

Match the terms to the technical fields in which they are most commonly used. 1. mezzo 2. arachnid 3. igneous 4. troposphere 5. monolithic pour 6. entree 7. heterotropia 8. allusion 9. stinger

1. music 2. biology 3. geology 4. meteorology 5. monolithic pour 6. culinary arts 7. medicine 8. literature 9. fire fighting

Consider a French-owned cheese factory located in Paris, France. Are the goods made by the cheese factory part of the U.S. Gross Domestic Product (GDP)? Are these goods included in the U.S. Gross National Product (GNP)? In 1 or 2 sentences, explain your response.

A French-owned cheese factory located in Paris, France would not be apart of the U.S. Gross Domestic Product. The goods are also not included in the U.S. National Product because it is French-owned and located in Paris, which means it is not produced and does not receive profits in/from America.

In 1 or 2 sentences, explain if a country would rather have a trade surplus or a trade deficit. Then, in 2 or 3 sentences, explain the difference between balance of trade and balance of payments.

A country would want to have a trade surplus opposed to a trade deficit, because that means they are making more sales, earning more revenue, growing, and hiring more workers, rather than buying more products from the other country than they are selling to them, which hurts the economy and can result in slower economic growth and fewer jobs. Balance of payments is the overall record of all economic transactions of a country with the rest of the world. Balance of trade is the difference in the value of exports and imports of only visible items.

In 1 or 2 sentences, explain whether a monopolist uses resources efficiently

A monopolist chooses a quantity that is less than the equilibrium level. The single seller does this to maximize profits. But keeping the quantity lower than the equilibrium level means that resources are not being used efficiently.

Comparative advantage

A nation is able to produce more of a good or service at a lower opportunity cost than its trading partner

Absolute advantage

A nation is able to produce more of a good or service than its trading partner in the same amount of time and using the same amount of resources

Select the true statement about standards for weights and measures.

A pound of flour from the Fluffy Flour Company will be the same weight as a pound of flour from another company.

Select the true statement(s) about entrepreneurs.

A small business owner may be an entrepreneur and a producer. Entrepreneurs believe they can make a profit from their invention. Entrepreneurs usually work longer hours than most people.

Balance of payments

A summary of the transactions (or payments and receipts) between one country and another over a period of time

In 3 or 4 sentences, explain the relationship between the equilibrium price and efficiency.

At equilibrium price, producers are not wasting resources. They are allocating their productive resources efficiently because the supply meets the demand. If they were not at the equilibrium price, they would either have shortages or surpluses.

In 1 or 2 sentences, define an externality and explain how the government makes companies take responsibility for negative externalities.

An externality is an unintended effect that result from an action. The government then creates regulations to prevent negative externalities, which if not followed could result in fines and/or harsher penalties.

In 2 or 3 sentences, explain why putting the demand and supply schedules together can help you to see what price and quantities will be demanded and supplied in the marketplace.

By putting demand and supply schedules together, you can view the lowest price (where demand is greatest and supply is least) and at the highest price (where demand is least and supply is greatest). By having these schedules together as a table, you are able to see the highest price and quantities that are acceptable for consumers to consider a demand.

The 3 kinds of producers in an economy:

Companies: A large section of producers are companies. They make the goods and services that you find in malls, restaurants, and other businesses. Companies produce goods and services that are wants or needs. For example, companies make economic wants, including laptops, iPods, and expensive clothing. They also make needs, such as medicines and food. Consumers pay for and then own the goods and services made by companies. When you go into a store and buy a pair of shoes, you pay for and own shoes produced by a company. Governments: In the U.S., the government produces goods and services, such as public education, mail delivery, and road construction. These goods and services are called public goods. They are products that are accessible to everyone. For example, the government provides the service of mail delivery. People do not pay a specific mail delivery charge and yet they receive this service. But people do pay for public goods by paying taxes. Nonprofit organizations: These organizations include charities and private clubs. They produce goods and services mainly to benefit their group members or causes. Like a company, they produce goods and services that are sold to consumers for specific prices. For example, a school music group may hold a bake sale to raise money to pay for new uniforms. Consumers attend the sale and buy cakes, cookies, and other baked goods. But like a government good, the money raised goes to benefiting everyone in the group equally.

Select the items that increase personal income.

Earned Income Tax Credit rent subsidy

In 2 or 3 sentences, explain what happens to jobs and the sales of goods and services during economic growth.

Economic growth is when more products are being made, more money is being spent, higher income is earned, and the Gross Domestic Product continues increasing. When this does occur, the government may create more public goods and companies may expand their business, both of which require more employees, which allows people to obtain a job easier due to the demand. When more people are given jobs, and the wages are raised, they are able to afford products they couldn't before, and the influx of money earned from the higher demand, the companies are able to invest, and continue the cycle.

In 1-3 sentences, explain economies of scale.

Economies of scale are all about lowering the average cost of an item, which means that making more of a product results in lowering the average cost of the product.

According to the United Nations, many countries with very high development are located in _____, and many countries with low development are located in _____.

Europe, Africa

Select all the items that describe advertising.

can be in print or on the Internet might use celebrity endorsements

T/F: Simple interest is calculated as a percentage of the bank balance and interest already earned.

False

Part of U.S. Gross Domestic Product (GDP)? Part of U.S. Gross National Product (GNP)?

Food from an American-owned pizza store in Chicago Yes, Yes Service from an American-owned hospital in St. Louis Yes, Yes Clothes from an American-owned store in Los Angeles Yes, Yes Cell phones from an American-owned store in Dallas Yes, Yes Cars produced by a Japanese-owned company located in North Carolina Yes, No Services provided by American-owned restaurant in London, England No, Yes

GDP per capita

GDP divided by the number of people living in a country

Sergio likes to drive and thinks that gas will be around forever. What is the problem with Sergio's thinking?

Gas is a nonrenewable resource.

real GDP

Gross Domestic Product adjusted for price changes

nominal GDP

Gross Domestic Product in current dollars

_____ includes the goods and services made in a country, and _____ includes goods and services made from domestically owned factors of production.

Gross Domestic Product, Gross National Product

If a government is interested in knowing the total income of its citizens (including remittances, or money earned in a foreign country and sent back home), it should look at the _____.

Gross National Product (GNP)

In 1 or 2 sentences, describe which is greater: gross pay or net pay.

Gross pay is higher than net pay because it is the full amount of wages or salary that you can earn, which does not include deductions.

Select other ways to measure the quality of life in a country besides the real GDP per capita.

Human Development Index Genuine Progress Indicator Index of Social Health

In 1 or 2 sentences, identify a change (either increase or decrease) in supply or demand that would cause the equilibrium price to increase.

If a company has a product that has been out for a while, and they have steady income, they likely know their equilibrium price. However, if they decide to start advertising their product or if it's endorsed by a celebrity, more people will discover the product and will increase the demand, making the equilibrium price increase.

Suppose the Federal Reserve wants to stop inflation from growing. In 2 or 3 sentences, explain how its actions slow economic growth.

If the Federal Reserve wants to stop inflation from growing, they will decrease the money supply. In doing so, the interest rates rise, which leads individuals and businesses to borrow less money, resulting in little to no consumption or investments. Not having enough money supply prevents the economy to grow, and could possibly cause an economic downturn.

In 1 or 2 sentences, describe why sellers in a perfectly competitive market have no control over price.

In a purely competitive market, producers have much lower market shares and therefore take the price determined by the interaction of buying and sales decisions in the marketplace.

Select the items that describe how business investments can cause economic growth.

Investments increase GDP Investments create more jobs Investments can lead to more demand for goods.

Select the statement that is not true about bartering.

It's difficult to determine fair values for goods and services.

_____ is caused when the Federal Reserve increases the money supply.

Monetary inflation

In 1 or 2 sentences, describe how money that you save in the bank can be channeled to an investor.

Money that you save in a bank can be channeled to an investor when your bank issues a loan.

In 1 or 2 sentences, explain the similarities between monopolistic competition and oligopoly.

Monopolistic competition and oligopoly are similar because they both can influence their prices, and they have differentiated products.

Subsidies

Payments made by the government to particular industries

In 1 or 2 sentences, describe why some people support rent control.

People believe rent control can make it possible for people with low-paying job to afford, because the cost of renting is lower.

Select the items that describe possible problems with being unemployed and not earning income.

People cannot afford to buy food. People cannot support their families. People cannot afford medical treatment. People cannot afford housing.

Select the items below that describe why scarcity exists.

People's wants are unlimited. Resources are limited.

Your friend is a business owner in a Market economy. What decides how to allocate the productive resources he uses?

Prices on Production and Consumption

In 1-2 sentences, explain why the private businesses will not provide public goods.

Private businesses will not provide public goods because they are provided by the government from our taxes. If a good or service cannot be withheld from those who do not pay for it, private businesses will not produce it, because they do not believe they can earn profit.

Early Form of Money: cattle limestone grain shells cocoa beans salt

Problem: hard to transport and perishable hard to carry and transport eventually spoiled could break wore out (not durable) ruined when wet

Select all the items that occur at the equilibrium price.

Producers earn revenue to cover costs. There are no shortages or surpluses. Consumers buy all the goods that are supplied.

Select the situation that will occur when a shortage of bread exists, and consumers pressure producers to change their actions.

Producers respond by supplying more bread.

Embargoes

Prohibitions on trade, usually imposed for political reasons, by a government against a foreign nation

Quotas

Quantitative restrictions on imported goods

problems with using real GDP per capita to measure standard of living

Real GDP per capita does not reflect distribution of wealth - Real GDP per capita shows the level of output in a country divided equally by the number of people living in a country. But, in reality, output may not be distributed equally among everyone in the country. For example, suppose a country makes a lot of money from the production of one good, such as oil. Imagine that there are only a few people in the country who own and benefit from selling that good. These few people are very, very wealthy. But the rest of the country's population is relatively poor. Overall, this country may have an acceptable level of GDP per capita because it produces a lot of oil. But does real GDP per capita truly represent the standard of living for most of the population? No, real GDP per capita does not show the material comfort level for most of the country's people. Real GDP per capita does not show unpaid work - Many people do work that is very important to society, but they are not paid for their labor. Volunteer work is an example of this kind of labor. People devote their time to preparing food for those who cannot afford basic needs, helping out with special needs children, visiting the elderly, and educating others about promoting a cleaner environment. All these jobs improve the quality of life for many Americans. Yet they are not included in GDP or GDP per capita. Real GDP per capita does not reflect changes in the quality of life - Real GDP per capita does not fully count things that affect the quality of life, such as clean air, clean water, and leisure time. Negative externalities, such as pollution, also do not fully show up in the real GDP per capita.

In 2 or 3 sentences, explain why real GDP per capita does not reflect the actual distribution of wealth.

Real GDP per capita does not reflect the actual distribution of weath because there may be a few very wealthy people, while the others are at poverty level. Because GDP is an average, it does not reflect reality of the area as a whole.

In 2 or 3 sentences, explain if rent control is a price floor or price ceiling. Then name one advantage and one disadvantage of rent control.

Rent control is a price ceiling because the owner cannot charge any higher. The advantage lies with the renter, because his cost of renting can never go up. The disadvantage is for the property owner, because he is limited in the amount of income he can receive, even if his expenses go up.

Standards

Requirements pertaining to health, product safety, packaging, labeling, etc., that are imposed on imported goods

_____ are counted in both the Gross Domestic Product (GDP) and the Gross National Product (GNP).

Services from an American-owned hospital in Montana

Which of the following situations is an example of the kind of decision a government would make in regard to its property rights?

Should this land be used to build a library?

The largest amount of money the government lays out is for the transfer program, _____. And its largest expenditure is for _____.

Social Security, national defense

In 1 or 2 sentences, mention two factors that are not included in real GDP per capita, but are included in another standard of living measurement.

The Human Development Index is a measurement of how long people are expected to live from birth, and education. The Index of Social Health stresses three main factors in its standard of living measurement: child poverty, health care coverage, and how many people complete high school.

Balance of trade

The difference in value between a country's imports and exports; a country's balance of trade can be favorable (exports are greater than imports) or unfavorable (imports are greater than exports)

In 1 or 2 sentences, explain how a government pays for expenses that are more than its revenues.

The government pays for expenses that are more than its revenues by borrowing from individuals and foreign countries, and they pay interest until they are able to return the money.

Select the items that describe the results of scarcity.

There are not enough goods and services to meet everyone's wants. Using resources today means having fewer of them in the future.

income approach (measures GDP)

This method adds up all the incomes earned by producers, including profits; also includes taxes paid to the government.

Two Wheel Bicycle Company increased its market share from 10 percent to 25 percent during one year. Select statements that could be true as a result of this increase.

Two Wheel Bicycle manufactures more bicycles. Employees get a raise. Two Wheel Bicycle increases its advertising budget. The owner opens another Two Wheel Bicycle store.

Suppose that the economy is suffering from a recession (or type of economic downturn). Businesses are closing, and people are losing their jobs. In 1 or 2 sentences, list two fiscal policy actions that could help the economy to recover faster.

Two fiscal policy actions that could help the economy to recover faster would be for the government to lower taxes, and to spend money.

In 1 or 2 sentences, explain how unemployment insurance helps people who do not have jobs.

Unemployment insurance helps people without jobs by giving enough money to pay their bills.

Seasonal Unemployment

Unemployment that happens because certain periods of times require more workers and other times require fewer workers. For example, more people are hired by department stores during the holiday season because there are more customers. But then after the holiday times, the department stores eliminate these jobs.

Structural Unemployment

Unemployment that happens from the changes in the structure of the economy, such as when jobs are cut because computers replace working people.

Frictional Unemployment

Unemployment that happens when people leave their jobs to look for new ones, or when students finish school and are looking for jobs.

In 1 or 2 sentences, mention (1) one disadvantage of using real GDP per capita as a standard of living measurement and (2) one factor that is included in an alternative measurement for the quality of life, but not found in the GDP per capita.

Using real GDP per capita as a standard of living measurement can be a problem because it does not reflect the distribution of wealth. However, when using the Human Development Index, you see that it measures child poverty, which may indicate that the GPD is high due to very wealthy individuals, while the majority of the population is poor.

Main economic questions that all countries face.

What goods and services will be produced? How will goods and services be produced? Who will consume the goods and services?

Select the economic questions that involve the consumer.

Who will consume the goods and services? What goods and services will be produced? How will the goods and services be produced?

Select the items that describe why consumption might increase during periods of economic growth.

Workers receive higher wages. More people acquire jobs and earn wages. Cost of borrowing money is lowered.

In 2 or 3 sentences, explain how to calculate Gross Domestic Product using the expenditure approach.

You can calculate the Gross Domestic Product by adding together all the money spent on final goods and services in one year. In doing so, you determine how much money is spent on consumption, money spent on investment, money spent by the government, and money spent on net exports.

Select all the items that describe the role of a producer.

You want to charge a price that earns profits. You want to charge a price that covers variable costs. You want to have a large market share.

market share

a company's sales divided by the total sales in the industry over a certain period of time

acronym

a composite of a larger term, created by using only the first letter of the most important words in that term.

cymbal

a concave brass plate that produces a brilliant clashing tone

central bank

a country's primary authority on areas related to money

basso profundo

a deep bass voice that extends to C below bass staff

An example of a need is _____.

a drink of water

need

a good or service required for survival

want

a good or service that people would prefer to have, but do not need

dome mountain

a natural formation that resembles a dome

Which of the following best describes a consumer?

a person who buys goods and services

A music download costs $1.00 for one song. $1.00 is an example of _____ .

a retail price

check

a set of written directions that tells a bank how to use money to pay someone

artiste

a skilled musical or theatrical performer

An abbreviated name made by using only the first letter of the most important words in a longer name is called _____.

acronym

service

action that can satisfy people's needs or wants

expansionary policy

actions intended to encourage (or expand) economic growth

contradictionary policy

actions intended to slow economic growth

expenditure approach (measures GDP)

add together all the money spent on final goods and services in one year Money Spent on Consumption + Money Spent on Investment + Money Spent by the Government + Money Spent on Net Exports

aggregate

adding things together

product approach (measures GDP)

adds up the final goods and services, using their market prices.

Select the items below that are part of a cost-benefit analysis.

advantages and disadvantages of making a decision what you gain and give up from each choice a way to find the choice that gives you the most gains from a decision a rational approach to decision making

Sixty new grocery stores opened. This will _____ both the price and quantity of food in the marketplace.

affect

collusion

agreement between two or more people to limit competition and earn higher profits

legal contract

agreement enforceable by law

Total output refers to the goods and services made by _____ producers in a country.

all

total output

all goods and services produced by using the factors of production

quantity

amount

money supply

amount of money available in the economy, including money in circulation, such as the money in your wallet and money in demand deposits, such as money held in checking accounts in the bank, and demand deposits; currency, coins, and checking account deposits

bank balance

amount of money in a bank account

budget deficit

amount of money that a government overspends in a certain amount of time

exchange rate

amount of one currency that can be traded for a unit of another currency

A budget deficit is the _____.

amount overspent in a certain time

wage

amount that a person earns for working expressed in a unit of time, like $9 an hour

vertebrate

an animal having a spinal column in contradistinction to an invertebrate, an animal that does not have a spinal column

An ophthalmo-orhinolaryngololist is _____.

an eye, ear, nose, and throat specialist

Consumer Price Index (CPI)

average change in prices of commonly used goods and services; the basket of goods and services includes food and beverages, housing expenses, clothing, transportation, medical care, recreation, education and communication, and other things.

checking account

bank service that allows a person to keep his or her money in the bank and to take out the money on demand

Money makes trading easier by replacing ________ with transactions involving paper money, coins, and checks.

bartering

Competition in the cell phone market results in _____.

better quality cell phones

Select the items that are considered low risk investments.

bonds the bank

Who directs an orchestra?

both conductor and maestro

In an economy without price controls, market pressures _____ increase or decrease prices.

can

Your friend is a business owner in a planned economy. What decides how to allocate the productive resources he uses?

central authority

risk

chance that things will turn out differently than expected

marginal benefit

change in total benefit resulting from an action

marginal cost

change in total cost resulting from an action

marginal revenue

change in total revenue resulting from adding one more unit of a good or service

marginal utility

change in total utility resulting from an action

Consumers influence how goods and services are made by _____.

choosing which goods and services to buy

condition

circumstance

Select the items that describe how labor unions try to increase the wages of workers.

collective bargaining reducing the supply of labor increasing the demand for labor

The shoe industry has many sellers, many buyers, and similar products. Shoe companies function in a _______ market.

competitive

The grocery store wants to increase the demand for ice cream cones, so it puts ice cream on sale. This shows that the grocery store owner thinks that ice cream and ice cream cones are _____.

complements

A person shuts off the lights before leaving a room. This is an example of _____

conservation

competition

contest between rivals

economic growth

continual rise in a nation's production of goods and services -makes more products -spends more money -earns more income -means that the Gross Domestic Product continues to increase

A movie writer can ______ his movie script in order to benefit financially from his creation.

copyright

Select the items granted by the government to provide intellectual property rights.

copyrights trademarks patents trade secrets

If an empty building costs nearly a million dollars to purchase, which organization would likely be the most able to purchase it?

corporation

accounting cost

cost of producing a good or service

marginal cost

cost of producing an extra unit of output

Select all the factors that might determine your preference for a new shirt.

cost of the shirt design on the shirt color of the shirt how the shirt looks on you

variable cost

cost that changes as output changes (depend on how many goods and services are sold. So even if no one demands a room, the hotel owner still pays the fixed costs)

Select all the items that describe factors that market participants face as part of the decision process

costs and benefits incentives and disincentives

The main factors that determine quantity supplied are price and _____.

costs of productive resources

fixed cost

costs that does not change as output changes (are paid, even if the producer does not sell any goods or services)

Externalities can distort the true _____ and _____ of goods and services.

costs, benefits

After determining the marginal cost and the marginal benefit of an option, the next step is to _____ .

decide which is greater: marginal cost or marginal benefit

An oil refinery makes both gasoline and diesel fuel. The price of gas has increased, which means that the supply of diesel fuel will most likely _____.

decrease

To help the economy grow, the federal government can _____.

decrease tax levels

When the light bulb industry went from being a single-seller market to a competitive market, the price of light bulbs

decreased

A natural monopoly can occur when the average cost of making a good _____ a lot as output increases.

decreases

As a market moves from a single seller to a competitive one, a product's price _____.

decreases

The Federal Reserve _____ the money supply to lower inflation.

decreases

The law of diminishing utility states that as you consume more of a good, the satisfaction that you feel _____ .

decreases

economies of scale

decreasing the average cost of each good as output increases

quality

degree of excellence for something, such as a product

Producers _____ labor, and workers _____ labor.

demand, supply

To find the price, a monopolist looks at the price _____ at the chosen quantity.

demanded

Dividing up scarce resources refers to resource _____.

distribution

Which is not a class of rock?

disturbed

You go clothes shopping and find a great pair of jeans. They fit you perfectly, but they also cost $100. You are willing to buy them, but you only have $50 in your wallet to spend on new clothes. The pair of jeans _____ as demand for you.

do not count

gross pay

full amount of wages or salary that you earn

Ben wants to sell his used couch to Pam. Ben and Pam will trade the couch for money, if both individuals expect to _____.

gain

What is a type or classification of writing in literature called?

genre

You just received your driver's license. You went for your first drive, and you had an amazing time! This incentive will most likely result in you _____.

going driving again

Select the items below that are kinds of services.

going to the doctor getting a haircut mowing the lawn

Susan bought a new computer. She purchased a ____.

good

production substitute

good that can be used as a replacement for another good in the production process

Select the items that people consume to satisfy their economic wants.

goods services

imports

goods and services bought from foreign countries

exports

goods and services sold to foreign countries

fad

goods and services that become peopler very quickly and then lose their popularity very fast

substitutes

goods or services that can replace other goods or services

capital good

goods that are made and used to make other goods and services

complements

goods that go together

What person or organization will usually supply goods and services when it appears that the benefits to society outweigh the costs to society?

government

price control

government limit on the maximum or minimum price of a good or service

demand curve

graph that shows the relationship between price and quantity demanded

supply curve

graph that shows the relationship between price and quantity supplied

Select the items below that describe specific kinds of producers.

grocery store owner medical doctor trial lawyer

Your _____ is the full amount of money that you earn without anything taken out for items such as taxes and Social Security.

gross pay

net pay

gross pay minus deductions, such as income taxes and Social Security contributions

satisfaction

happiness

Select a situation that describes the utility derived from purchasing a cell phone.

happiness from using your new cell phone

utility

happiness; satisfaction

maitre d'

headwaiter, a shortened form of maitre d' hotel, literally master of the house

Select the items that describe incentives for an employee to accept a job offer.

high wages good benefit package safe work environment

The decision by shoe store owners to fix their prices will result in consumers paying _____ prices.

higher

Select the items that can result in higher interest earned.

higher interest rate higher balance

A supply curve for the car industry would show that automakers supply the most cars at the _____ price.

highest

Individuals and companies respond to incentives in order to allocate their scarce resources in ways that provide the _______ possible returns to them.

highest

Opponents of rent control believe that it causes _____.

housing shortages

Both the quantity and quality of a workforce that makes cars describes the company's _____.

human capital

labor

human resource that is used to produce goods and provide services

Select the items that describe perfect competition.

identical products many sellers cannot influence price

Gum and candy are often for sale right next to cash registers. This buying situation encourages consumers to use their money to make ______ purchases.

impulse

analysis

in-depth study

Both the satisfaction of creating new products and the possibility of earning money are _____ for an entrepreneur.

incentives

By establishing property rights, governments provide ________ for people to create new goods and services.

incentives

Fifty new food businesses have entered the food market. The supply of food at each price level will _____.

increase

You just received a raise at work and consider meat a normal good. This means that your demand for meat will _____.

increase

inflation

increase in the prices of commonly used goods and services

Inflation is a(n) _____ in the prices of many goods and services, which _____ purchasing power.

increase, decreases

Economic growth can result from a(n) _____ in government expenditures and a(n) _____ in net exports.

increase, increase

Select the policies that are intended to encourage economic growth.

increasing government spending reducing interest rates increasing the money supply

When the economy is growing, total output is _____ and total income is _____.

increasing, increasing

intellectual property

intangible assets that result from creativity

Select the items that describe what most likely happens when the Federal Reserve increases the money supply.

interest rates fall people borrow more money investment increases

Federal Reserve increases money supply

interest rates fall > individuals and businesses borrow more money for consumption and investments > consumption and investments go up > Gross Domestic Product (GDP) goes up economic growth

Federal Reserve decreases money supply

interest rates rise > individuals and businesses borrow less money for consumption and investments > consumption and investments go down > Gross Domestic Product (GDP) goes down > economy is growing more slowly, or not at all (economic downturn)

public good

item that can be used by everyone, provides benefits to more than one person at a time, and whose use cannot be restricted to only those people who have paid to use it

public good

item that is provided to society; something that can be used by everyone, provides benefits to more than one person at a time, and whose use cannot be restricted to only those people who have paid for it

money

items that are widely accepted as final payment for goods and services (also called currency)

The special vocabulary of a particular field of interest is called _____.

jargon

Division of labor can lead to higher wages because it increases _____.

labor productivity

liability

legal obligation to repay a debt

The price of gas just increased. This will most likely make people buy _____ gas in the future.

less

standard of living

level of comfort that people feel when goods and services are available to them

wage structure

levels of jobs and earning ranges

Select items that affect incentives for people to produce and exchange goods and services.

liability rules property rights contract enforcement standards for weights and measures

scarce

limited

Select the items below that describe nonrenewable resources.

limited can be fossil fuels, metals, and minerals

Jacob wanted a parking space in a nearby lot. He filled out an application and a computer generated his choices. This is an example of distribution by _____ .

lottery

minimum wage

lowest amount of money that an employer can pay a person for working

Select the items that can reduce the amount you pay for a good or service.

mail-in rebate coupon comparative shopping

maximizes

makes as big as possible

Which action illustrates rational behavior?

making a decision after logically thinking about the choices

Select the items that are jobs of the Federal Reserve.

manage risk in the financial markets watch banks and protect customers provide banking services influence the money supply

cuisine

manner of preparing food

A producer charges $500 for a cell phone, but buyers are not buying any cell phones at this price. So at this price, the producer is willing to supply _____ phones, and consumers are willing to buy _____ phones.

many, zero

A company charges $5 for its product. This monetary amount represents the __________ of making an extra unit of the product.

marginal benefit

People design computers, and machines assemble them. Gas is then used to transport the finished computers to stores. Select the factors used in producing computers.

natural resources human resources capital goods

One of the problems with using real GDP per capita to determine the quality of life is that it does not fully account for _____.

negative externalities

penalty

negative incentive that makes people worse off

Select all the items included in the Gross Domestic Product (GDP), according to the expenditure approach.

net exports consumption investment government spending

Countries with the highest Gross Domestic Product (GDP) _____ have the highest GDP per capita.

never

Gross Domestic Product (GDP) includes _____ goods and services.

new

At a price of $65, consumers demand 650 pairs of shoes, and sellers supply 650 pairs of shoes. At $65, there is _____.

no excess supply or demand

monopoly

no substitutes barriers to entry resources used inefficiently

Real Gross Domestic Product (GDP) is _____ adjusted for price changes.

nominal GDP

Brian has given up looking for a job. He has searched for more than a year and does not believe that a job for him exists. He is _____ in the unemployment rate.

not counted

The cost of making a new skirt is $20. At a price of $15, consumers will demand 600 skirts, and producers will ______ skirts.

not supply

Real GDP per capita for the United States is calculated by dividing real GDP by the _____.

number of people living in the country

unemployment

number of working-age people who do not have jobs

good

object that can satisfy people's needs or wants

The car market is an example of _____ because it has few sellers who offer differentiated products.

oligopoly

A monopoly has _____ seller(s), but perfect competition has _____ seller(s).

one, many

The market value of cell phones made and sold in America by a Japanese-owned company is included in _____.

only the Gross Domestic Product (GDP)

The Earned Income Credit is one alternative to ________ controls.

price

alternative

option

not-for-profit organizations

organizations established mainly for religious, health, educational, civic, or social purposes

labor productivity

output (of goods and services) divided by number of workers used to produce the output

denomination

paper money of a certain value

market share

part of total sales held by one seller

salary

payment for work

royalty

payment to a person with a copyright or patent to use his or her product

You don't want to buy one of the new music downloads, but your friends convince you to buy it anyway. This is an example of _____.

peer pressure

references

people that comment on a person's character and qualifications

labor force

people who are sixteen years old or older who are actively seeking work

saver

people who put aside some of their money for future use

investor

people who put their money into something (such as stocks), because they hope to make more money

unemployment rate

percentage of the labor force that is willing and able to work, does not currently have a job, and is actively looking for work

bells

percussion instruments consisting of metal bars or tubes

competitor

person or group that rivals another

producer

person who makes goods or provides services

consumer

person whose economic wants re satisfied by using goods and services

consumer

person whose needs and wants are satisfied by using goods and services

purchasing power

person's ability to buy goods and services, given his or her income

When we speak of inanimate objects as if they were human, what are we using?

personification

market

place where buyers and sellers exchange goods and services

equilibrium point

point at which the supply and demand curves intersect

reward

positive incentive that makes people better off

You have a choice between buying a cell phone or a camera. You choose the cell phone. The cell phone represents your _____.

preference

Select all the items that are public goods or services.

roads education military police force

regulations

rules that control the behavior of others

regulations

rules that govern behavior

antitrust laws

rules that prevent the creation and behavior of monopolies

You start your own company and decide that administrative assistants will earn between $30,000 and $40,000 each year. This scope refers to the administrative assistant's _____.

salary range

You work as a salesperson in an electronics store. You earn an hourly wage plus a commission based on a percentage of your _____.

sales revenue

A consumer uses goods and services to _____.

satisfy economic wants

Economics is the study of _____ resources. These resources include natural, _____, and capital goods.

scarce, human

salary range

scope (or range) of earnings

Select all items that describe kinds of externalities.

secondhand smoke air pollution from trucks unclean water from fertilizers spillovers from medical research

price taker

seller that cannot affect a product's price

price setter

seller that determines a product's price

In a market economy, market prices are determined through buying and _____ decisions.

selling

customer service

service provided to consumers during and after the buying process

Ellen had a bag full of pencils. She gave out one pencil to everyone in the class. This is an example of distribution by _____ .

sharing

People are demanding more apartments than sellers are willing to offer. This means that there is a _____ of apartments.

shortage

Price controls can cause _____.

shortages and surpluses

People who think that businesses should decide everything about their production also believe that the government _____ impose regulations that tell businesses what to do.

should not

You are more likely to sell your goods at very high prices if you are in a _____ market.

single seller

Select the producers that have earning profits as a main goal.

small firms corporations

Select the organizations that use grants as a means to raise money.

small firms not-for-profit organizations

economics

social science that focuses on decision making

patent

sole right granted to an individual who invents a good or service; a grant by the government to make, use, and sell an invention for a certain amount of time

entrepreneur

someone who organizes productive resources to make goods and services

tangible

something that can be touched

intangible

something that cannot be touched

incentive

something that encourages people to act; something that motivates someone to act in a certain way

trade secret

something that gives a producer an economic advantage over other producers

investment

something that people put their money into because they hope to make more money in the future

Real GDP per capita is the most popular way to measure _____.

standard of living

Examining the real GDP per capita in different countries allows economists to compare _____ in different parts of the world.

standards of living

piracy

stealing intellectual property

Pam and Roger go skiing on Sunday morning, and they enjoy their time. On Monday, they go skiing again. This time they fall a lot, and Roger has to sit out the rest of the day. After Monday, Pam and Roger would most likely want to _____.

stop skiing and find something else to do

When money is deposited in the bank for later use, it is a _____.

store of value

The cost of producing a new watch is $50. At a price of $100, watches will most likely be _____ and _____.

supplied and demanded

There are more jeans in the stores than consumers are willing to buy, at the given price. This means that there is a _____ of jeans.

surplus

demand schedule

table that shows the relationship between price and demand

supply schedule

table that shows the relationship between price and quantity supplied

Select examples of unpaid work that are not included in the real GDP per capita.

taking care of your parents washing dishes doing laundry

tariff

tax on imported goods

productivity

the amount of output that comes from a unit of input

texturing

the application of a plaster-like product over wallboard in a manner that produces a different look

Sally works for a big corporation because she wants to earn a high salary. Fred works for a not-for-profit organization because he wants to help people in medical need. This illustrates that the goals of different organizations affect _____.

the benefits of the people who work for these businesses

federal reserve

the central bank of the United States

risk

the chance of something turning out differently than expected

jargon

the language of a particular group, profession, or activity

economic cycle

time from one economic peak to another economic peak; behavioral pattern in the economy that includes growing and shrinking phases

preferences

the people, objects, or actions that are chosen over other options

minting

the process of stamping out a coin from metal

property right

the right to decide how a resource is used; the right to exclude others from using the good or service and the right to transfer the ownership or use the resources to others

microeconomics

the study of individual parts of the economy Prices - Price of a cell phone Unemployment - Number of people who lost their jobs in a market Output - Quantity of cars produced

macroeconomics

the study of the whole economy Prices - Price of many goods and services Unemployment - Number of people who lost their jobs in a country Output - Quantity of all goods and services made in a country during the year

euphemism

the substitution of an inoffensive expression for one that may offend

demand

the willingness and ability of consumers to buy a good or service

physiological needs

things essential for a person's body

A company bought a piece of land. It can use this resource to build a factory on or to plant crops on. The company can also hold onto the land and try to resell it later for more money. The company decides to build a factory on the land. Any value given up from not choosing the other options is the _____ .

trade-off

Shari is trying to decide how she should use her cash birthday gifts. Her choices are new clothes, a concert ticket, or donating the money to her favorite charity. Shari decides to donate the money. The value given up by not choosing both the clothes and the concert ticket is called a _____ .

trade-off

Select the items that describe voluntary exchanges.

trading money for a car bartering baseball cards occurs between individuals and countries

confidence

trust

bond

type of security that is issued for a certain amount

cyclical unemployment

unemployment that happens when the economy is growing slowly or shrinking

externality

unintended (or "spillover") effects that result from an action

externalities

unintended consequences

When you compare the prices of two different pairs of shoes, money is a _____.

unit of account

celebrity endorsement

use of famous people to promote a product

advertising

use of media to persuade consumers to buy a product or service

You have some materials (otherwise known as your resources) at home including poster board, construction paper, markers, and colored pencils. You want to earn some extra money, and you have two choices: go into the card making business or the banner business. You choose banner making. After four days of trying to find customers, you end up with zero orders. This incentive will most likely cause you to _____.

use your resources to make cards instead

marginal analysis

using marginal measurements to allocate scarce resources for benefit maximization

efficiency

using resources effectively, without wasting them

inefficient

using resources in a wasteful way

trade-off

value of all the alternatives given up

opportunity cost

value of the best alternative given up

Suppose that Joe does the same job as Susan but receives a lower salary. This is an example of _____.

wage discrimination

Employers are willing to pay _______ and ______ to workers, because they expect to be able to sell the goods and services at prices high enough to cover the costs of production.

wages; salaries

desire

want

Select all the items that describe price.

what a producer receives from selling a good what a consumer pays when buying a good

benefit

what is gained when a decision is made

exchange costs

what is given up from trading or bartering

cost

what is given up when a decision is made

open-market operations

when a central bank buys and sells securities to influence the growth of the money supply

price floor

when a price is set above the equilibrium price and not allowed to decrease (minimum price)

price ceiling

when a price is set below the equilibrium price and not allowed to increase (maximum price)

You and a friend go clothes shopping and find a great pair of jeans. They fit you perfectly, but they also cost $100. You are willing to buy them, but you only have $50 in your wallet to spend on new clothes. Your friend likes the jeans and has the money to buy them. The jeans would count as a demand for _____.

your friend, because he likes the jeans and has the money to buy them