Answer Key for Economics 101 Chapter 1 – Flashcards
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According to Adam Smith, what is necessary to achieve an increase in production?
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Specialization
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When people pursue their own interests, they also:
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create many alternatives for others
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What is a market economy based on?
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Private property rights
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Sound economic theory is primarily focused on choices made by whom or what?
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Individuals
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Economists believe that most people are more likely to act:
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With an end or goal in view
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Economists can be characterized by its focus on:
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Choices and unintended outcomes
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The basic economic problem for society is the combined existence of:
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Scarce economic resources and unlimited economic wants
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Which of the option indicates the major opportunity cost of going to college on a full-time basis?
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The foregone income that could be earned working a full-time job
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Economics may best be defined as the:
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Social Science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity.
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Opportunity costs exists because:
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The decision to engage in one activity means forgoing some other activity.
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Economics is a social science that studies how individuals, institutions, and society may:
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Best use resources to maximize satisfaction of economic wants
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The basic truth that underlines the study of economics is the fact that we all face:
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Scarcity
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A recurring theme in economics is that people:
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Have unlimited economic wants, but limited resources
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Money is not an economic resource because:
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Money, as such, does not produce anything.
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Economic way of thinking is a social phenomena from the actions and interactions of individuals who are choosing in response to expected additional benefits and costs to them. Question: does this assume people are selfish, materialistic, and shortsighted?
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No
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Apparatus of mind focuses on action is the consequence of:
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Scarcity
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People make choices under scarcity by:
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Comparing expected benefit and expected cost
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Clearly defined and enforced property rights:
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encourage the effective use of already existing scarce resources. Spark efforts to discover new resources. innovate new cost-cutting technologies. Answer: All the above
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Social coordination is a process of continuing mutual adjustment. Example:
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Freeway Checkout counter Market Answer: All the above
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How does society determine the course of actions necessary to produce the goods and services we enjoy?
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Invisible hand
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