ECON 2010 Exam 1 - Chris Barker Harding University
Price. Quantity Demanded Quantity Supplied 5 30 80 4 40 65 3 50 50 2. 60 35 1 70 20 The equilibrium price and quantity, respectively, are
$3 and 50 units.
https://harding.instructure.com/courses/1223640/files/45828592/preview If this economy devotes all of its resources to the production of washers, then it will produce
0 dryers and 100 washers.
Supertown's Production Possibilities Toys Glasses 400 0 300 600 200 1,100 100 1,500 0 1,800 What is the opportunity cost to Supertown of increasing the production of toys from 200 to 300?
500 glasses
Which of the following statements about models is correct?
A model can be accurately described as a simplification of reality.
https://harding.instructure.com/courses/1223640/files/45828592/preview It is NOT possible for this economy to produce at point
A.
https://harding.instructure.com/courses/1223640/files/45828592/preview Efficient production is represented by which point(s)?
C, D
Adam Smith is most clearly associated with which political economy?
Capitalism
Karl Marx is most clearly associated with which political economy?
Communism
Which has been the reason for the failure of Communism?
Corruption
How are economists NOT like mathematicians, physicists, and biologists?
Economists typically pay closer attention to natural experiments through history than lab experiments.
Since communism is a declining political economy, we really don't need to study it.
False
What is the greatest difficulty with making Socialism work in a society?
How to pay for the programs
What are two primary disagreements between the political economies that we discussed?
Property rights and the limits of government intervention
What does Adam Smith believe is necessary for economic growth?
Pursuit of self-interest, division of labor, and freedom of trade
If a person chooses self-sufficiency, then she can only consume what she produces.
True
Interdependence among individuals and interdependence among nations are both based on the gains from trade.
True
It is possible for the U.S. to gain from trade with Germany even if it takes U.S. workers fewer hours to produce every good than it takes German workers.
True
Which of the following is NOT an example of a group responding to an incentive
Universities offer fewer online classes when they generate more revenue at the same cost than traditional classes.
Who gets scarce resources in a market economy?
Whoever is willing and able to pay the price.
Productivity is defined as the
amount of goods and services produced from each unit of labor input.
Total output in an economy increases when each person specializes because
each person spends more time producing that product in which he or she has a comparative advantage.
A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. However, redistributing income from rich to poor reduces the reward for working hard. Therefore, society faces a tradeoff between
efficiency and equality.
At the equilibrium price, the quantity of the good that buyers are willing and able to pay
exactly equals the quantity that sellers are willing and able to sell.
The law of DEMAND states that, other things equal, when the price of a good
falls, the quantity demanded of the good rises.
Socialism is a political economy that
has a majority of programs and businesses owned and controlled by the state.
Communism is a political economy that
has complete government control and no property rights
Capitalism is a political economy that
has little government control and a significant amount of private property.
A circular-flow diagram is a model that
helps to explain how the economy is organized.
A popular celebrity that is paid highly for her time should probably not mow her own lawn because
her opportunity cost of mowing her lawn is higher than the cost of paying someone to mow it for her.
Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that
in order to consume beyond its PPF, the United States should produce more pork than what it requires and export some of it to Mexico.
Trade between countries tends to
increase both competition and specialization.
The business cycle is the
irregular fluctuations in economic activity.
A competí e market is a market in which
no individual buyer or seller ha any significant impact on the market price.
The production possibilities frontier provides an illustration of the principle that
people face trade-offs.
The law of SUPPLY states that, other things equal, when the price of a good
rises, the quantity supplied of the good rises.
Fundamentally, economics deals with
scarcity.
A monopoly is a market with one
seller, and that seller sets the price.
As a student, Jordyn spends 40 hours per week writing term papers and completing homework assignments. On one axis of her production possibilities frontier is measured the number of term papers written per week. On the other axis is measured the number of homework assignments completed per week. Jordyn's production possibilities frontier is a straight line if
she can switch between writing term papers and completing homework assignments at a constant rate.
The market supply curve
shows how the total quantity supplied of a good varies as the price of that good varies.
Economists make assumptions to
simplify the complex world and make it easier to understand.
Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies that X and Y are
substitute goods.
If the number of sellers in a market increases, then the
supply in that market will increase.
A rational decision maker
takes action only if the marginal benefit of that action exceeds the marginal cost of that action.
The production possibilities frontier illustrates
the combinations of output that an economy can produce
The primary determinant of a country's standard of living is
the country's ability to produce goods and services.
The bowed-outward shape of the production possibilities frontier can be explained by the fact that
the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing
When a country has a comparative advantage i producing a certain good,
then specializing in the production of that good and trading for other goods could allow that country to consume at a point beyond its production possibilities frontier.
Economics is the study of how society manages its
unlimited wants and limited resources.
The opportunity cost of an item is
what you give up in order to get that item.
The opportunity cost of an item is
what you give up to get that item.
