ECON: Chapter 1-2 DSM

produce more of a good or service than competitors using the same amount of resources

Absolute advantage is the ability of an individual, firm, or country to:

all trading partners who specialize in goods where they have competitive advantage

According to the theory of comparative advantage, specialization and free trade will benefit:

invisible hand

Adam Smith observed that people pursuing their own self-interest in a free market will actually result in the best interest of society as if these actions were guided by a(n):

An example of economic capital

Bulldozer

Economic decisions are made at every level in society. When we try to decide which production method to use among several alternatives, which of the following key economic questions are we trying to answer?

How do we produce the product?

has a lower opportunity cost in the production of that good.

If a country has a comparative advantage in the production of a good, then that country:

A positive economic statement

If minimum wage rates rise, then unemployment will rise.

The division of labor

In his 1776 book, "An Inquiry into the Nature and Causes of the Wealth of Nations," Adam Smith notes that specialization increases productivity. Which of the following was the cause of this phenomenon?

are guaranteed by two amendments in the US Constitution.

In the U.S., property rights:

firms

In the circular flow model of the economy, __________ are the suppliers of goods and services

Product markets

In the circular flow model, which of the following refers to markets where goods such as computers or services such as medical treatment are offered?

centrally planned economy

In what type of economy does the government decide how economic resources will be allocated?

People respond to economic incentives

Jim declined to take part in a health study on a free basis but changed his mind after being offered $1,000 to participate in the study. Jim's behavior best illustrates which economic principle?

an absolute advantage in both jobs

Ms. Boulware is the best lawyer and the best secretary in town. She has:

evaluate the marginal cost and marginal benefit of that decision

One of the first steps in deciding whether to complete your education is to:

natural resources

Resources provided by nature and used to produce goods and services are known as

Which is not a possible opportunity cost of attending college?

The cost of housing

smaller

The principle of increasing marginal opportunity cost states that the more resources devoted to any activity, the_________ the payoff to devoting additional resources to that activity

scarcity

The principle of opportunity cost evolves from the concept of

taking risks

The role of an entrepreneur always involves:

physical capital

The stock of computers, factory buildings and machine tools used to produce goods is known as

mixed economy

U.S. economy is best classified as a...

Protect intellectual property rights

What are copyrights designed to accomplish?

Opportunity Cost

What is the name given to the highest-valued alternative that must be given up to engage in any activity?

overall standards of living increase

When nations specialize in their comparative advantage and engage in trade:

a market

When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?

North Korea

Which of the following countries has an economy where most of the resource allocation is determined by a central planning authority?

To allow individuals or firms to have exclusive access to the use of their own property

Which of the following is critical to the success of the market system?

Invention

a name given to the development of an economic good

an import

a product produced in a foreign country and purchased by residents of the home country is called:

Economics

concerned with how people respond to incentives

marginal benefit is equal to marginal cost

economists believe that an individual or firm should continue any activity until...

Macroeconomics cannot be used to understand

how a consumer decides between the purchase of two different cars

According to the rationality assumption

people would not make decisions that would make them worse off

Macroeconomics is not concerned with...

political party affiliation

Economics is the study of choice under the conditions of...

scarcity

goods

tangible products like cars and television are known as