quizes 1-4

Flashcard maker : Lily Taylor
“The economy” refers to the sum of all our:
Production and consumption activities
C
To an economist, scarcity means that:
There are not enough resources available to satisfy all our desires
D
What is not a factor of production?
The $100,00 used to start a new business
B
Capital, as economists use the term, refers to:
Final goods that are used to produce other goods and services
D
The role of the entrepreneur in an economy is to:
Bring the factors of production together to assume the risk of production
A
T/F
All output combinations that lie outside a production-possibilities curve are attainable with available resources and technology.
False
T/F
Efficiency in production means getting the most output possible from the available resources.
True
T/F
Adam smith observed how government directives can lead to the best allocation of resources.
False
T/F
The essential feature of the market mechanism is the price signal.
True
T/F
Government failure occurs when government intervention fails to improve economic outcomes.
True
In order to measure what a country produces, we:
Summarize the monetary value of output
D
What is not included in the U.S. GDP?
Shoes produced by NIKE in foreign countries and sold in the U.S.
C
Economic growth
Is an increase in output or real GDP
A
Suppose during a year an economy produces $10 trillion of consumer goods, $4 trillion of investment goods, $6 trillion of government services, and has $ 4 trillion of exports and $5 trillion of imports. The GDP would be:
$19 trillion
A
Outsourcing [American firms sending work to foreign countries] leads to:
Increases in productivity and increases in total output
A
What is an example of investment, as a component of GDP?
The purchase of a truck by a delivery company
A
The productivity of American workers reflects
Scarcity of plant and equipment
D
Which of the following is a true statement?
A) Government intervention is sometimes used to reduce the external costs of production
B) Income transfers are included with government purchases in calculating the GDP
A) Government intervention is sometimes used to reduce the external costs of production
What describes state and local taxes in the U.S.?
They tend to be regressive… taking a higher percentage of dollars as income falls
B
In the United States, the richest fifth of the population (20%) recieves about one-half (50%) of all income
this statement is True even though the U.S. has proportional tax system
B
The goals of the market participants are the maximization of:
Satisfaction from purchases for consumers, profits for business, and society’s general welfare for government
C
Business firms supply goods and services to ____ and purchase factors of production in ____.
Product markets; Factor markets
C
Abuyer is said to have a demand for a good only when:
The buyer is both willing and able to purchase the good at alternative prices
B
A shift in demand is defined as a change in the :
Quantity demanded at any given price
C
What is a determinant of supply?
Available technology
D
What providess an example of the law of supply?
Price falls and the qauntity supplied decreases
D
T/F
An increase in the price of one good can cause the demand for another good to increase if the goods are substitutes.
True
T/F
The market mechanism satifies consumer desires and maximizes business profits
False
sociopsychiatric explanations of consumer behavior include the:
Desire for ego and status
A
Economic explanations of consumer behavior include:
Prices and income
D
Utility refers to the:
Satisfaction obtained froma good or service
A
The law of diminishing marginal utility suggests that:
People are willing to buy additional quantities of a good only if its price falls
A
Price elasticity helps to explain:
The amount by which the wuantity demanded will change if price changes
C
T/F
The law of diminishing marginal utility does not apply to goods that a person really enjoys
False
T/F
The price elasticity of demand tells us how consumers respond to a change in income
False
The demand of cigarettes is relatively price inelastic
True
A successful advertising campaign will make demand for the product less price elastic
True
When a firm advertises it is attempting to decrease the price elasticity of demand for the product
True

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