ECON ASSIGNMENT 1 – Flashcards
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A market system is characterized by the private ownership of resources and the use of prices to coordinate economic activity. T/F
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TRUE
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When somebody buys an insurance policy, that person is seeking to transfer risk away from herself and pass it on to the insurance company. T/F
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TRUE
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As a consequence of the problem of scarcity:
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Individuals have to make choices from among alternatives
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Which of the following is considered an economic resource?
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The land that is designated as national parks by the government
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The production possibilities curve is a graph of:
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The maximum combinations of products that can be produced
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The problems of central planning become less complex as an economy grows in size over time. T/F
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FALSE
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The basic truth that underlies the study of economics is the fact that we all face:
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SCARCITY
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A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule: Refer to the above table. If the nation uses all of its resources to produce only wheat, then its production combination will be:
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A
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Which of the following is considered a firm's "factor of production"?
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The office building occupied by the firm
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The opportunity cost of doing or getting something is best and fully defined as:
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The value of the best alternative that is given up in order to do or get something
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In a market system, the income earned by owners of natural resources is called interest income. T/F
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FALSE
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Profits are the primary "success indicator" for firms in a centrally planned economy. T/F
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FALSE
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The economy of the United States can best be described as laissez-faire capitalism. T/F
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FALSE
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Lauren makes $150 a day as a bank clerk. She takes two days off work without pay, to fly to another city to attend the concert of her favorite band. The cost of transportation and lodging for the trip is $250. The cost of the concert ticket is $50. The opportunity cost of Lauren's decision to attend the concert is:
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$600
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In a competitive market economy, firms and resource suppliers seeking to further their own self-interest will end up, as though guided by an "invisible hand," promoting the public interest. T/F
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TRUE
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Have a high fixed salary is what motivates entrepreneurs to make prudent decisions is dealing with business risk. T/F
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FALSE
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Which of the following would not be considered a capital resource by economists?
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A van used by a mother to transport the family around
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In a command economy, the head of each household makes the fundamental economic choices such as what to produce and how to produce output. T/F
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FALSE
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In the circular flow model, households act as buyers in the resource markets. T/F
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FALSE
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After graduating from high school, Adam is thinking about going to college. The college tuition is $15,000 a year. Instead of going to college, Adam could take a full-time job that pays $25,000. What is Adam's opportunity cost of attending college for one year?
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$40000
