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Economics Unit 1 Review Flashcards | StudBud
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Economics Unit 1 Review
Economics Unit 1 Review
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1
What does it mean to say that free markets are efficient?
Everyone is assured of getting basic necessities
Buyers and sellers trade until both are satisfied
Decisions are made quickly with little confusion
Information is communicated around the world.
2
How does trade increase the value of an item?
It makes the item more expensive to buy.
It provides work for storekeepers and truckers.
It transfers the item to someone who values it more
It puts more different goods into competition.
3
Which scenario best illustrates the law of diminishing marginal utility?
Someone who doesn't listen to music does not care about getting a new CD
A new toy is less exciting to a child w/ many toys than to a child w/few
A collector of china figurines is eager to get a new one.
A car breaks down more often as it gets older.
4
What is the law of unintended consequences?
Attempts to intervene always backfire.
Actions often have unforeseen effects
Economic booms are always followed by downturns.
Markets are always influenced by emotional factors
5
What is the difference between a shortage and scarcity?
A shortage results from rising prices; scarcity results from falling prices
There is no real difference between a shortage and scarcity.
A shortage is a lack of all goods and services; scarcity concerns one item
A shortage can be temporary or long-term, but scarcity always exists
6
an arrangement that brings buyers and sellers together to do business with each other
co dependence
markets-coordinate-trade principle
no free lunch principle
market
7
Which of these terms is most closely related to tradeoffs?
margin
markets
incentives
scarcity
8
An economy producing the maximum amount of goods and services is
growing
efficient
underutilized
trading off
9
Which of the following is an example of using physical capital to save time and money?
switching from oil to coal
hiring more workers
lowering workers’ wages
updating equipment
10
the idea that many decisions involve choices about using or doing a little more or a little less of something
Costs vs. Benefits
Thinking at the Margin
Economic Enigmas
Scarcity Forces Trade-offs
11
What does it mean to maximize utility?
to strengthen the skills of a workforce
to become as efficient as possible
to strengthen a national infrastructure
to gain the most satisfaction possible
12
What are the factors of production?
land, labor, and capital
risk and opportunity
wages, salaries, and profits
goods and services
13
Why are economies most efficient when they have full employment?
No productive resources are left unused
Unemployment offices can be closed.
Wages are spent for consumer goods
No one person has to work too hard.
14
What do people supply in return for factor payments?
innovation, profit, or goods
land, labor, or capital
innovation, labor, or trade
services, goods, or traditions
15
Which of these is the main reason for national differences in comparative advantage in producing raw materials?
differences in local business practices
differences in monetary systems
differences in allocations of natural resources
differences in cultural traditions
16
Which of the following statements is most accurate?
The federal gov't is ALWAYS ineffective and rarely meets the needs of a
free market ALWAYS is able to meet the needs of a modern society.
The free market is usually less effective in meeting societal needs.
Govt intervention can be useful because the marketplace cannot always
17
A company’s office buildings and the equipment it uses are both examples of
capital
land
labor
opportunity cost
18
Each society answers the three basic economic questions based on
its unique combination of values and goals.
its degree of economic growth.
the desire to achieve economic freedom
the number of factor payments
19
Economists assume people choose something when its expected costs are less than its
chief competitors
required maintenance
anticipated benefits
working life
20
Which type of economy is rooted in ancestral traditions?
market
traditional
command
mixed
21
In the circular flow model, which of these is a factor payment?
the hourly wage a store pays to a clerk
the monthly mortgage on a house
the check someone writes to buy groceries
the credit card charge for ordering games online
22
Which term best describes the fact that we depend on others to produce most of the goods and services we want?
absolute advantage
division of technology
economic interdependence
commercial productivity
23
What is the best test of an economic model?
It helps people make decisions more easily.
It is useful for both explaining past events and predicting future ones.
It has gone unchallenged for decades.
It is accepted by both liberals and conservatives.
24
Which is the best example of specialization?
A surf shop lowers the price on swimsuits.
A dry cleaner spends extra time on grease spots.
An assistant in a tailoring shop only replaces zippers.
An assistant in a tailoring shop only replaces zippers.
25
Economics is _______________________.
The study of how people make money
The study of how business operate and get consumers to buy their products
The study of how people seek to satisfy their wants&needs by making choice
The study of how scarce resources can be increased through efficiency
26
People who decide how to combine resources to create new goods or services in hopes of making a profit are called
entreprenuers
scientists
educators
economists
27
the branch of economics that applies value judgments to data in order to recommend actions or policies.
macroeconomics
normative economics
microeconomics
predictable economics
28
Which of these statements is an example of normative economics?
Inflation is higher this year
The bond market is in decline
Speculation caused a recession
Taxes ought to be lowered.
29
Which type of economy is most common today?
command
mixed
traditional
market
30
In a voluntary exchange, why do people give something up?
to comply with state requirements
to get something they want more
to increase their self-sufficiency
to allocate scarce resources fairly
31
Which statement is the best example of thinking at the margin?
John has six shirts and is trying to decide whether to buy a seventh
Mary observes that the average cost of shoes is higher than last year.
Jane wants to buy a car but decides she cannot afford the insurance.
David decides to volunteer this summer instead of working for pay.
32
What would government do in a model free enterprise system?
protect property rights and enforce contracts
support entrepreneurs to encourage innovation
stay out of economic activity altogether
ensure that prices remain reasonable
33
Why are tradeoffs necessary?
Resources are limited
Advertisers promote products.
People want different things.
Every product has flaws
34
an economic system based on supply and demand with little or no government control.
traditional
command
mixed
market
35
Why might some historians consider Adam Smith one of the most influential people in history?
He introduced a way of thinking about economic ideas
He wrote the economic argument for American independence.
He argued for a larger role for the government in the economy
He taught that all people should be economic equals
36
What is represented by Point B in the Factor Market?
the flow of money
government expenditures
the flow of resources
the marginal cost of goods
37
What is represented by Point A in the Product Market?
government expenditures
the flow of resources
the marginal cost of goods
the flow of money
38
Why did the Soviet Union experience many surpluses and shortfalls?
The country depended on imports to obtain resources
Central planners could not manage every detail.
The cold Russian climate made farming hard.
The labor force was not well educated.
39
Which of the following is not a market?
an online auction site
a neighborhood garage sale
a high school classroom
a large appliance store
40
How does division of labor increase productivity?
Workers move often from job to job.
Workers require minimal training
Workers become expert at one task.
Workers can be paid a lower wage.
41
Which of the following is a major reason the standard of living in Japan is much higher than in Nigeria?
greater human capita
richer natural resources
fewer temporary shortages
more foreign residents
42
Which of the following is a characteristic of a market economy?
an oversupply of labor
price control systems
unrestricted competition
strong government planning
43
People’s wants are unlimited. This fact means that which of the following is always present?
marginal utility
scarcity
costs of production
shortages
44
The belief that the government should not interfere in economic affairs is known as
eminent domain
popular sovereignty
habeas corpus
laissez-faire
45
Which of these economic goals is most important in a traditional economy?
efficiency
growth
stability
freedom
46
What does Adam Smith’s idea of an “invisible hand” represent?
the way that markets coordinate trade
the concern of people for one another
the divine oversight of human affairs
the economic role of governments
47
Ocean waves can be used to generate energy. Ocean waves are considered which type of resource?
renewable
capital
perpetual
nonrenewable
48
a puzzle or riddle that may be explained through economic analysis
hypothesis
enigma
puzzle
claim
49
Which of the following has a command economy?
The United States
South Korea
Finland
North Korea
50
the condition that results because ___________ people have people have limited resources but unl
Socialism
Scarcity
Supply
Shortage
51
What is the main reason Americans specialize more today than the early pioneers did?
We have more access to markets.
We live in less crowded conditions.
We have more vocational training.
We depend less on transportation.
52
The economic principle that people are motivated by something to take a particular course of action.
Costs vs. Benefits
Markets Coordinate Trade
Incentives Matter
Future Consequences Count
