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Econ- Unit 1 Test Review Flashcards | StudBud
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Econ- Unit 1 Test Review
Econ- Unit 1 Test Review
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A economics review of Ch. 1, 2, 3.
Flashcards
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Questions
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Answers
1
Which of the following is NOT a characteristic of a traditional economy?
Entrepreneurs are discouraged
Everyone helps each other in times of trouble
Many people live below the poverty line
People have freedom to choose what to do
2
What are the 3 basic questions?
How, what, and when to produce
How, for whom, and what to produce
What, why, and how to produce
What, why, and for whom to produce
3
What is infrastructure?
Way to deal with negative externalities
Help provided to people that need it
Systems required for society to function
Benefit to someone not involved in a transaction
4
This is when the factors of production are owed by individuals
Communism
Socialism
Privatizing
Capitalism
5
What type of economic system does Country Delta have?
Market
Command
Traditional
6
What is Economics?
Study of how choices are made about use of limited resources
Unlimited wants that must be satisfied w/ limited resources
Study of the value of the next best alternative
Examination of producers motivations and consumers desires
7
What does it mean when a country has consumer sovereignty?
Consumers are independent of production process
Consumers are provided for by the government
Consumers own the factors of production
Consumers decide what is produced
8
What is voluntary exchange?
Ownership of industry changes from individuals to the gov't
Organized way of using scarce resources
Idea that individuals determine what will be produced
Choosing to trade when the benefits outweigh the costs
9
Elements of traditional, command, and market economies are combined in a
socialist economy
mixed economy
pure market economy
centrally-planned economy
10
What economic system does Country Tango have?
Traditional
Command
Market
11
What is a subsidy supposed to do?
Encourage people to transfer money to people that need it
Encourage positive externalities by making items cheaper
Encourage more free riders by paying for them
Encourage people to earn a profit
12
Which of the following is NOT true of a public good?
Government provides them
People can't be excluded from the benefits of it
They transfer money to people that need it
One person's use of product doesn't diminish it for others
13
How does a modified free enterprise system deal with free riders?
Allow private companies to charge more money for products
Have the gov't provide products since they can force payment
Fine the free riders
Shoot them
14
Why does the government offer transfer payments?
To provide a safety net for people not helped in market econ
To get rid of free riders
To ensure fair competition
To pay for negative externalities
15
What should points D, E, & F be labeled?
Cereal, price of cereal, land
Land, cereal, labor
Cereal, wages, labor
Price of cereal, cereal, land
16
Which of the following is NOT a service?
Airline travel
Concert
Semi truck
Tutoring
17
What happens to the PPC when more resources are added?
Move from Point C to Point D
Move from Point B to Point F
Move from Point A to Point C
Move from Point D to Point E
18
How can you see opportunity cost on the PPC?
Moving from Point B to Point D losing Good Y to gain Good X
Expanding the curve out when desires of the consumer change
Moving from Point F to Point D losing Good Y to gain Good X
Points under the curve shows you don't have enough resources
19
How can you see trade-offs on the PPC?
Shrinking the curve inward to Point C
All the options on the curve and under it are possible
Expanding the curve out to Point E
Moving from one pt on the curve to another pt on the curve
20
Which of the following is NOT a negative externality?
Area of town around bars after they close
Factory that pollutes the air
Someone who watches fireworks from their house
Secondhand smoke
21
Why is economics important?
Determines profit required for a company to be successful
Determines how much satisfaction people get from products
Determines how to use limited resources to satisfy desires
Determines if an item is a good or a service
22
What do points on the PPC tell you?
Economic growth has been reached
Resources are being used most efficiently
Consumers like these products
Scarcity doesn't exist
23
Why are the 3 basic questions important?
They determine the wealth and utility of the country
They determine the use of scarce resources
They determine the wealth of the country
They determine the utility of the product being produced
24
How is the PPC an economic model?
It makes reality simplier
It provides a profit to producers and consumers
It answers the 3 basic questions
It includes the cost of resources
25
What should points G, H, & I be labeled?
Cereal, roads, taxes
Price of food, roads, taxes
Wages, taxes, roads
Price of food, roads, wages
26
Why are people motivated to start their own business in a free enterprise system?
They want to gain profit
They want to provide public goods
They want to avoid externalities
They want to have control over resources
27
Which of the following is NOT a key freedom in a free enterprise economy?
Open opportunity
Consumer sovereignty
Free contract
Legal equality
28
What economic system does Country Gamma have?
Market
Traditional
Command
29
All of the following are examples of public goods EXCEPT
Fireworks
Health insurance
National defense
Street lights
30
What's the difference between communism and socialism?
Comm- all resources owned by gov't, Soc- some owned by gov't
Soc- some consumers provided for, Comm- all consumers
Comm- most resources owned by gov't, Soc- all owned by gov't
Soc- consumers choose products, Comm- gov't choose products
31
What does it mean for a country to privatize air traffic control?
This job would would not be controlled by consumers
Private companies would take over this job from the gov't
Gov't would decide the resources used in this job
The gov't would take over this job from private companies
32
What should points A, B, C be labeled?
Wages, Labor, Cereal
Wages, cereal, price of cereal
Price of cereal, wages, labor
Labor, Wages, Cereal
33
Which of the following is NOT an example of a factor of production in a pro football game?
Turf
Walter Camp
Fans
Gatoraide
34
Why is scarcity important in Economics?
It requires people to make choices
It causes producers to avoid resources that are scarce
It only applies to natural resources
It causes consumers to be willing to pay less for a product
35
What should arrows e, f, g, & h be labeled?
Price of TV, cut of price of TV, wages, wages
Price of TV, wages, cut of price of TV, wages
TV, TV, labor, labor
Wages, price of TV, TV, labor
36
What's it called when the factors of production are owned by individuals?
Market economy
Free enterprise system
Socialism
Communism
37
Which of the following is an example of a positive externality?
Opportunity to do what you want with your property
Quality bridges
Gov't providing products that private businesses wouldn't
Holiday lights on many houses
38
Which of the following is an entrepreneur?
The manager of LA Fitness
The workers at Dairy Queen
The owner of a spa
The person who started Uber
39
Why do market economies have a huge divide between the rich & poor?
There is no incentive to work hard
Government decides who gets education and who doesn't
Customers only favor rich producers
Some people can't afford the education needed to get ahead
40
Which of the following is an example of nationalizing?
Hospitals transfered to gov't ownership
More companies providing shipping services
New independent companies starting to provide cars
Cuba allowing individual companies to sell phones
41
How is a modified free enterprise circular flow different from a market circular flow?
Market version has many businesses while modified has few
Modified version doesn't apply to the US and market does
Modified version includes gov't while market does not
Market version keeps changing while modified version doesn't
42
Why must the government provide public goods?
If they didn't there would be externalities
No profit for private companies to make them otherwise
If they didn't there would be free riders
It protects freedoms in a free enterprise system
43
What would a normative economist potentially say about a state lottery?
Lotteries bring in X amount of income for the state
Lotteries are bad because they burden the poor
Lotteries have many people that play them
Lotteries cost the state money to pay out to winners
44
Which of the following would NOT be an example of a factor market?
Hair salon
For sale sign
Financial planner
Craigslist
45
Why does a command economy have a large government?
They need to encourage entrepreneurial ideas
They need to decide what and how products are made
They need to ensure the culture is continued
They need to ensure workers are efficient at their jobs
46
What point on the graph is the most inefficient?
Point E
Point C
Point A
Point D
47
What term best describes this?
Communism
Mixed economy
Free enterprise
Capitalism
48
In the following situation what is the opportunity cost?
Money earned babysitting
Concert
Cost of concert & movie
Time it takes to hike
49
What should a, b, c, & d be labeled?
Labor, labor, TV, TV
Wages, labor, TV, TV
Labor, wages, price of TV, TV
TV, labor, labor, price of TV
50
In the following situation what are the trade-offs?
Concert, movie, and hike
Concert, movie, babysitting, and hike
Concert
Movie & babysitting
51
How does the government deal with negative externalities?
Provide the product themselves
Discourage them with regulations
Limit the freedom of consumers
Discourage them with subsidies
52
What is a market failure?
When there is a big difference between the rich and the poor
resources aren’t used efficiently in a pure market system
When the gov't can't get resources to people
When entrepreneurs aren't encouraged
53
Which of the following would be under study in microeconomics?
Minimum wage
Terms of trade with foreign countries
Unemployment rate
Gross Domestic Product
