Economics Ch. 1-2
A division of labor enhances society's output by permitting people to take advantage of existing differences in their abilities and skills.
True
A market system is characterized by the private ownership of resources and the use of markets and prices to coordinate and direct economic activity.
True
A point inside the production curve illustrates that resources are not being used as efficiently as possible.
True
Both human specialization and geographic specialization are needed to achieve efficiency in the use of limited resources.
True
Command systems in the Soviet Union and Eastern Europe failed primarily because of coordination and incentive problems.
True
Economic growth is shown by a shift of the production possibilities curve outward and to the right.
True
Economic rivalry, or completion, requires a large number of buyers and sellers in the market.
True
Economics is primarily concerned with marginal changes from the status quo.
True
Economics is the study of the efficient use of scarce resources to achieve maximum satisfaction of economic wants.
True
Exchange by barter requires a coincidence of wants.
True
In a competitive market economy, firms and resources suppliers will seek to further their own self-interest, but at the same time, as if guided by an "invisible hand," they will promote the public interest.
True
In the U.S. economy, corporations account for about 20% of the firms, and about 84% of the total sales revenue.
True
In the U.S. economy, rents are the smallest source of household income.
True
In the U.S. economy, services account for over half of all consumer expenditures.
True
In the circular flow model, households fiction on the selling side of the resources market and the buying side of product markets.
True
It is generally agreed that a major advantage of the competitive price system is the achievement of greater efficiency.
True
Macroeconomics is concerned with the whole economy or it's major sectors.
True
Marginal analysis is the comparison of additional benefits with the additional costs.
True
More specialization in a market economy generally leads to the more efficient use of its resources.
True
Property rights have a positive effect in a market economy because they encourage owners to maintain their property.
True
Specialization in production can occur based on geographic advantages.
True
The concave, or bowed-out, shape of the production possibilities curve illustrates the law of increasing opportunity costs.
True
The fundamental economic problem is that productive resources are scarce in relation to the demand for them.
True
The implied production possibilities curve between work time and grades suggests that more hours spent working will mean income, but also less study time and a lower grade average.
True
The institution of private property is sustained over time by the right to bequeath to heirs.
True
The marginal cost curve for a product slopes upward as more units are produced because of the law of increasing costs.
True
The scientific method involves developing hypotheses from factual observations, and then testing the hypotheses.
True
An important part of the market system is that producers and consumers consider the public interest in making production and consumption decisions.
False
By using the same ceteris paribus assumptions, economic principles are just as certain and precise as those of the laboratory sciences.
False
Command systems in the Soviet Union and Eastern Europe failed primarily because of a lack of resources.
False
Economic efficiency entails getting the smallest amount of output from a given level of input of scarce resources.
False
From the "economic perspective" people make purposeful decisions based on hypotheses.
False
If a nation is incurring a trade deficit(it is buying more from abroad - importing, then it is selling abroad - exporting), then it is most likely producing beyond the frontier of its production possibilities curve.
False
If the marginal benefits are greater that the marginal cost of an activity, then society is overallocationg resources to this activity.
False
If the marginal benefits of the output from resources devoted to the production of a product are greater than the marginal costs, then there has been an overallocation of resources to the production of that product.
False
In the U.S. economy, housing accounts for over half of all consumer expenditures.
False
In the U.S. economy, sole proprietorships account for over half the firms and over half of total sales revenue.
False
In the circular flow model, there is a money flow of economic resources and finished goods and services and a real flow of income and consumption expenditures.
False
In the market system, prices tend to guide resources from less important to more important uses as the market system progresses.
False
One of the most important economic resources is money.
False
Property rights are the right of the government to own, use, and dispose of resources in an economy.
False
Selfishness and self-interest are the same concepts.
False
The concept of consumer sovereignty refers to situations in which consumers are represented on the board of directors of large corporations.
False
The economizing problem arises from the conflict between having relatively unlimited resources and relatively limited wants.
False
The economy of the United States can best be described as pure capitalism.
False
The four factors of production are land, labor, capital, and government services.
False
