Econ Test 1 Questions – Flashcards
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Which of the following was part of the teachings of Adam Smith?
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All of the above
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Market competition is one of many types of competition. But all types of competition result from?
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Scarcity
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Which of the following economic systems stresses free enterprise as a way of answering the basic questions of what to produce, how to produce and for whom to produce?
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Market
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Which statement describes the critical role played by profits in a market economy?
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Profits encourage businesses to efficiently produce the things people want.
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Households play important roles in the U.S. economy. They?
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All of the above
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Amal is a mechanic who owns a shop in Dearborn. He is a suspected terrorist supporter and has an extensive file at the FBI?
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Amal has an incentive to use his tools and equipment carefully and productively.
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Which statement explains the reason for scarcity?
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People's wants exceed the resources available.
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The economic problem of scarcity is most clearly related to?
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individuals' wants exceeding the resources available
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In a voluntary exchange between two people or businesses?
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they are letting producers know they want more sandwiches produced.
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The major purpose of any economic system is to deal with problems caused by?
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scarcity of resources.
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Of the following, economics is best defined as the study of?
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people using their resources, producing and exchanging to satisfy their wants.
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Which statement explains why market economies can be compared to "giant polling booths"?
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The goods and services produced are the ones consumers "vote" for with their dollars.
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There would be no competition if there were no?
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scarcity
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The person who starts a business and brings together and organizes land, labor, and capital in order to produce a product is known as?
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an entrepreneur
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Many things have been used as money throughout history. Which of the following best explains why money has evolved and changed over history?
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People have continually looked for better things to use as a medium of exchange, store of value, and measure of prices.
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Dick's Market must apportion the scarce shelf space on a particular aisle between breakfast cereals (very profitable) and laundry detergent (moderately profitable). It decides to use the foot of shelf space for neither product, but instead stocks a good supply of doggie treats. Based on this information, one can conclude that the marginal cost of the decision?
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is the increased quantity of breakfast cereals it could have sold by using the foot of shelf space for this product.
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Raw stinky fertilizer, coal, squirrels and daffodils are examples of?
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land
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The economic term SCARCITY is most often used to refer to?
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the condition of limited resources and unlimited wants
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An economist would most likely define a BENEFIT as something gainful that?
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satisfies specific needs or wants
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An economist would most likely argue that effective economic decision-making is based on?
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weighing the costs and benefits of various options
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People who create goods and services are most commonly called?
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producers
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An economist would probably agree that the central problem in economics is?
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how to meet people's wants and needs
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The decision to convert a piece of farmland to city housing represents?
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a choice to allocate scarce resources to another use
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To an economist, factors of production are also called?
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resources
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If a company uses all its resources to produce only pet food and pet toys, which of the following statements is true?
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If more pet toys are produced, less pet food can be produced.
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Vanessa wants to make as much money as possible during her summer vacation. She receives the following offer of part-time employment:
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the job at the law office
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The concept of economic scarcity refers mainly to decisions about?
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how resources are allocated
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Which of the following statements about scarcity is most likely true?
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Scarcity affects governments as well as individual consumers.
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Entrepreneurs would most likely be involved in which of the following activities?
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organizing resources to create new businesses
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Factory buildings, assembly line equipment and communications devices are examples of?
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capital
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Managers, technical trainers, and accountants are examples of a company's?
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human resources
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A city decides to build a hospital in one of its vacant lots instead of a sports center or a shopping mall. The opportunity cost of building the hospital is?
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the sports center or the shopping mall
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An economist would probably agree that to make effective financial decisions, consumers should?
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weigh the costs and benefits of individual choices
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Consumers are LEAST likely to be defined as people that?
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supply goods and services
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Business A decides to increase production of cars by buying new robots for the assembly line. This would be considered an investment in?
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capital resources
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"An opportunity cost is incurred whenever a person makes a decision about ________." An economist would probably argue that this statement is BEST completed with the phrase?
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how to use limited economic resources
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Country A has decided to improve the quality of its human capital. To accomplish this, Country A would most likely increase investment in its?
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education systems, job training programs, and medical care
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The United States economy is best described as?
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a mixed economy with market and government elements
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In a command economy, decisions about what to produce are made by?
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national political leaders and government officials
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All community members are fishers or farmers, all children grow up to do the same work as their parents and all family members work for the benefit of the community. The ideas above most likely describe aspects of which type of economy?
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traditional
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By definition, consumers are most likely to use their money to?
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satisfy specific needs and wants
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In a market economy, goods are most often produced as a result of?
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interaction between buyers and sellers
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Most economic systems attempt to address the problems associated with?
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the lack of resources necessary to meet the needs and wants of every person
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The market economy model of production and distribution is based on which of the following... I. private property II. market competition III. entrepreneurship IV. price system?
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All the above
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Which of these people is most often associated with the ideas and phrases which follow... • "Wealth of Nations" • benefits of free exchange in markets • concept of self-interest?
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Adam Smith
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According to the Adam Smith's principle of the "invisible hand," which of the following is MOST LIKELY to occur when a government in a mixed economy relaxes regulations within an industry?
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new competitors will enter the market
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A teacher adopts a new policy stating that grades for homework assignments will be reduced for each day an assignment is late. This is an example of?
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marginal cost
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Which explains why firms in a market economy try to give consumers what they want at a price they are willing to pay?
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Profits
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"Irma normally makes 10 ceramic plates in one day, and earns $200. If she makes 11 plates, she earns $206. The increase in her daily revenue is the ___________ of making one extra plate per day." Which of the following best completes this statement?
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marginal benefit
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In a market economy, prices provide important information. This means that if eager consumers bid up the price of submarine sandwiches?
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they are letting producers know they want more sandwiches produced.
