ECON UNIT TEST
Suppose that you own a company that silkscreens t-shirts. The cost of producing one t-shirt image is $1.50. The revenue you earn on each t-shirt is $3.75. What is your profit per t-shirt?
$2.25
An economic system in which all resources are government-owned and all production is directed by the central plans of government is known as a
(Pure) Command Economy
Households typically try to increase their level of satisfaction, happiness, and sense of well-being. In other words, households try to maximize their
utility
The law of comparative advantage helps explain?
why a person talented in many things can get more done by SPECIALIZING
Laws that reduce anticompetitive behavior and promote competition in the marketplace where competition is desirable are known as
Antitrust Laws
Being able to make something using FEWER resources than other producers require would give you
Absolute Advantage
an example of a renewable resource is
TREES air
Which type of economy produces the highest standard of living for its citizens?
Market economy
Which of the following is NOT true of a pure market economy?
Markets are regulated by the government
By-products of production or consumption that impose costs on third parties
Negative externalities
Monetary policy involves
changes in the quantity of money. control of the money supply, involes MACROECONOMY
The intellectual property rights of a song writer are protected by a
copyright.
An individual who tries to earn a profit by developing a new product or finding a better way to produce an existing one is a
entrepreneur
Which of the following is a problem with pure command economies?
environmental damage
Suppose a steel factory pollutes the water that local residents inust drink, but the market price of steel fails to reflect such costs. Because the pollution costs are outside the market transaction, they are called
externality
Inputs used to create goods and services that people want are called
factor of production
Earned Income Tax Credit (EITC)
federal tax credits and cash payments for low-income workers. low income WORKERS
The most important economic decision-maker in market economies is
household
Which factor might best help an economy to grow?
labor force increases
Scarcity arises because all societies have
limited resources to satisfy unlimited wants
a study of total consumption in the US economy would involve
macroeconomics
Most economies today are:
mixed economies
The economy of the United States is best described as
mixed economy
an example of public good, in an economic context, is
national defense, flood control, street lights, roads, dams, lighthouses, autopsies
an example of an exhaustible resource is
oil coal
If U.S. production falls short of consumption, Americans buy the difference from
other countries
A public utility is
produces a good or service in the public interest. eg. water or electricity to consumers
In a market economy, what rights give resource owners the freedom to use their resources as they see fit?
property rights
Economics is the study of how
societies allocate goods for needs
The opportunity cost of a chosen item or activity is
the value of the best alternative you must pass up
