Economics Final: Old Tests

After hiring which worker, does the shoe factory experience diminishing marginal returns?

C. 5

Which of the following groups of names contains only capital resources?

C. Machines, tools, factories

What is the opportunity cost to a nation that chooses to spend another $1 billion on a defense project rather than on an education program?

C. The $1 billion education project

When the price of ice cream goes up, what will ice cream parlors do?

Ice cream parlors will want to supply more ice cream to make more money.

Both Pepsi and Coca-Cola make different types of diet soda. There are different flavors and some sodas have caffeine while others do not. Why might a supplier be willing to produce so many different types of diet soda?

In order to see which type of soda will sell the best and provide them with the most money.

Equilibrium, sneaker market: Athlete increases popularity of a specific brand of sneaker

Increase in demand Change in consumer tastes/advertising EP (increase) EQ (increase)

Consumers worry that the price of sneakers may increase next year

Increase in demand Change in expectations EP (increase) EQ (increase)

Government passes subsidy on companies who offer free sneakers to their employees to encourage a more active lifestyle.

Increase in supply Change in government subsidies EP (decrease) EQ (increase)

Two new sneaker shoe companies enter the market and production begins immediately.

Increase in supply Change in number of suppliers EP (decrease) EQ (increase)

"Delaware Teachers are forced to accept 15% decrease in pay" How will this affect the demand curve for movie tickets?

Left shift down Decrease demand Change in income

"Seniors Flock to Aspen, Colorado for Winter Break" How will this affect the demand curve for vacation rentals in Denver?

Left shift down Decrease demand Change in market size

"Chipotle offers Burritos two for $10" How will this affect the demand curve for El Diablo?

Left shift down Decrease demand Change in substitute goods

"Gas Prices to Stay Low This Year - Rise Dramatically Next Year" How will this affect the supply curve for gasoline?

Left shift down Decrease supply Change in producer expectations

"U.S. Car Company to Close Six Factories" How will this affect the supply curve the company's minivans?

Left shift down Decrease supply Change in # of suppliers

Factories, farms, shops, office buildings, mines and machinery; used to produce other goods and services

Means of production

An economic system that combines both private ownership and government ownership of the means of production

Mixed economy

At the point of equilibrium, the same numbers of sellers and buyers come together and there are no ______________ or ________________

Shortages or surpluses

Excess supply occurs when quantity _____________ is greater than quantity _____________. This causes ____________.

Supplied, demanded, surpluses

If people have a choice between smoothies or tea, instead of coffee, what will happen when the price of coffee goes up?

The demand for smoothies or tea will increase

6 characteristics of market economy

1. Limited government 2. Private ownership 3. Freedom of Choice/Free Enterprise 4. Motive of Self-Interest 5. Competition 6. A System of Market & Prices

The reason scarcity exists is that

A. People want more goods and services than can be produced

The following excerpt from the South Korean Constitution stating "private enterprise may not be nationalized nor transferred to ownership by a local government" suggests that

A. Private companies cannot be owned by the government

Which of the following is most likely to happen in a market economic system?

A. Storekeepers will try to give customers what they want

How are all 6 characteristics of market economy present in Copyright Clause?

All six characteristics are present in the Copyright Clause because this clause is basically stating that people in a market economy have the right and freedom to work where they want. The government is also very limited in a market economy, according to the Copyright Clause. This clause is showing that a market economy system is an efficient system and can lead to innovation. This type of economic system allows investors to have control over their products. Overall, this clause can really encourage a market economy in the U.S.

Example of a company, product, or inventor who benefited from Copyright Clause

An example of a company who benefited from this clause would be "The Cookie Dough Cafe", two entrepreneurs who started their own line of edible cookie dough. They benefit greatly from the Copyright Clause because the government has little control over the goods and services they're producing. Therefore, they are able to maintain control over their products. The one downfall of this type of economic system, however, is that they may run into some competition which could hurt their business.

Which is a question that nations answer when determining their type of economic system?

D. All of the above

The table shows the marginal product of labor at the shoe factory. How many workers does it take to create the highest marginal returns?

B. 4

The fall of the Soviet Union in 1991 led to

B. Greater economic and political freedom among the nations of Eastern Europe

In a free market system, the amount of goods and services that any one household gets depend on its

B. Income and wealth

Which of the following is an example of an economic good?

B. Pair of sneakers

The opportunity cost of a good is

B. The quantity of other goods sacrificed to get another unit of that good

What are the shifters for supply?

Changes in technology, changes in input, changes in government subsidies, changes in producer expectations, changes in government taxes and regulations, and changes in number of suppliers

Compare & contrast two of the three economic systems

Command: government makes all decisions, government controls what goods/ services are produced in the company (prevents monopolies), this system is AKA communism, and the government owns means of production Market: AKA capitalism/free enterprise, people have freedom to work where they want (there's competition), the government is limited, whoever can afford it owns means of production

Other businesses selling the same item or service

Competitors

What are the shifters from demand curves?

Consumer tastes & advertising, change in income, change in market size, change in consumer expectations, change in related goods

A market can be accurately described as

D. A place where buyers and sellers meet

The following except from the Constitution of North Korea stating "North Korea relies on socialist production relations and on the foundation of an independent national economy" suggests that

D. North Korea does not encourage trade outside of its borders

In a free market _____________ ______________

D. Prices adjust depending on supply and demand

When the 5th worker was hired, the marginal product of labor becomes negative. Why does this happen?

D. There are too many workers

Equilibrium, sneaker market: Price of rubber decreases dramatically

Decrease in supply Change in input EP (decrease) EQ (increase)

Excess demand occurs when quantity ____________ is greater than quantity __________. This causes ____________.

Demanded, supplied, shortages

Things that go into the making of goods and services

Economic resources

How does the Copyright Clause serve as an economic provision to encourage a market economy in the United States? Be sure to [1] Identify all six characteristics of a market economy [2] Explain how all six characteristics are present in the Copyright Clause and [3] Provide an example of a company, product, or inventor who benefited from this clause

Essay

True or False: Traditional Economic Systems typically are present in large countries

False

The term used to describe the choices made by people; another item you might have bought with the same money

Opportunity cost

How does opportunity cost affect decision making? Provide an example.

Opportunity costs affects decision making because with each decision, there is an additional cost. The opportunity cost is a trade-off or choice made to buy something else with the same money. For example, an opportunity cost would be if I had a certain amount of money left over from buying school supplies and I decide to use the money for a new shirt. The cost of the supplies would be the opportunity cost. Sometimes this can affect making decisions because it can hurt a company if they don't put their money to good use.

Order of marginal product of labor graph (when labeling)

Positive, Diminished, Negative

Equilibrium can be defined as the point at which _______________ and _______________ are equal and they intersect on a graph.

Quantity supplied and quantity demanded

"Overalls are back, in a big way!" How will this affect the demand curve for Gap Overalls

Right shift up Increase demand Change in consumer tastes/ advertising

"Record Peach Harvest - Prices Lowest in a Decade" How will this affect the supply curve for peach pies?

Right shift up Increase supply Change in input

"Shoe Manufacturer Increases Prices on All Styles" How will this affect the supply curve for the company's sneakers?

Right shift up Increase supply Change in price

"Padua Uniforms to increase by $30.00 in 2015" How will this affect the demand curve for uniform sales?

Right shift up Increase demand Change in consumer expectations

"Robots Make Automobile Assembly Faster, Cheaper" How will this affect the supply curve for cars?

Right shift up Increase supply Change in technology

Useful work that cannot be seen or touched

Service

The higher the price of coffee, what will happen to the quantity of coffee demanded?

The quantity of coffee demanded will decrease.

When the price of ice cream drops, what actions will ice cream parlors take?

They will decrease supply.

True or False: A command economy decides resource allocation by government planning

True