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Economics Unit 2 Review Flashcards | StudBud
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Economics Unit 2 Review
Economics Unit 2 Review
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1
A market is a
place where buyers meet to protest prices.
group of people with common needs and wants.
place where sellers meet to make prices
group of buyers and sellers of a particular good or service.
2
Which economic system is based on customs of the past?
Traditional
Mixed
Market
Command
3
what is meant by market failure
the free market answer does not work
where social costs are considered
when the market is in equilibrium
where negative externalities are considered
4
This goal involves getting the most out of scarce resources
Efficiency
Growth
Equity
Stability
5
Which system is a combination of the 3 primary economic systems and is the most-used today?
Command
Traditional
Market
Mixed
6
This goal allows for the full use of all resources. Example would be that we use all factories
Security
Growth
Full employment
Freedom
7
Which of the following is an incentive
may be a reward or a penalty
the same as interest payment on capital
a reward
the opposite of opportunity costs
8
What is the purpose of the circular flow chart
Shows the relationship between supply and demand
shows the need for government in economic systems
shows how households and businesses interact in a market
it indicates the changing tastes in the product market
9
In the circular flow diagram of economic activity, households
buy goods and services from the product market
buy productive resources from resource markets
sell goods and services from individuals
derive income from resource markets
10
This goal results in increases in the ability of the economy to produce more
Growth
Equity
Security
Full emplyoment
11
A hardship for citizens of a commmand economy making a transition to a free market economy?
Entrepreneurs have fewer chances to start new businesses.
Workers would lose job security and guaranteed incomes.
Only poor quality goods would become available to consumers.
Farmers must to grow the crops that the gov't told them to.
12
Adam Smith, the prophet and father of laissez-faire believed that:
the government should not interfere with the economy
the government should interfere with the economy
under divine right the gov't wouldn't interfere in economy
mercantilism was the only way to insure free trade
13
What does government play in the circular flow ?
Provides certain some goods and services for everyone
I dont remember
Takes some income in the form of taxes
Represents the flow of money, goods service etc.
14
Why are free market economies able to attain economic growth?
Firms give incentives to encourage people to purchase goods
Government redistribution, motivating market growth
Competition encourages innovation, which causes growth
People buy goods they need, causing firms to produce more
15
What motives people to use their resources
profit
debt
to benefit society
sweat equity
16
An example of a negative externality
tennis
education
smoking
exercise
17
Adam Smith believed in
the role of government to regulate wages
the role of treaties to prevent war
the role of the working class to overthrow the wealthy class
the role of supply and demand to regulate prices
18
What are market economies based upon?
Freedom of individuals
Product availability
Price
Constant Factors
19
Going to school creates
a negative externality
A headache
a positive externality
No externality
20
This goal allows individuals to make their own economic choices
Stability
Freedom
Equity
Efficiency
21
A Public Good is
a good that everyone can consume
a good that is divisible and sold in a market
a good that is non-rivalrous but excludable
a good which is non-excludable and non-rivalrous
22
What “invisible hand”, as Adam Smith believed, regulates the free market economy?
competition and self-interest
incentive and efficiency
specialization
competition between firms
23
In the circular flow diagram of economic activity ,businesses
buy goods and services from the product market
purchase goods and services from individuals
derive income from resource markets
buy productive resources from resource markets
24
The government controls all aspects of the economy in which system?
Traditional
Mixed
Command
Market
25
Most public goods are funded by
Taxpayers
Income taxes
Corporate taxes
Community donations
26
Within the circular flow, there are two markets. These markets are the
product market & resource market.
market for business to sell goods & market to sell services.
market for the government & the market for everyone else.
market for tangibles & the market for intangibles.
27
The free-rider problem is
consumption that does not leave anything left to others
someone enjoy a good without paying
someone consumes too much of a good
someone pays without enjoying the good
28
The 3 questions that must be answered by the economic system are
What to produce, how to produce and how much government gets
What to produce, how to produce and for whom to produce.
What to produce, when to produce and how to produce.
How to produce, how much to produce and when to produce.
29
What are the 3 basic economic systems?
Traditional, Command, Market
Supply, Demand, Barter
Traditional, Mixed, Monarchy
Institutional, Free-Market, Demand
30
An Externality represents
effect upon a 3rd party which is not taken into account
the external failure of a market
the external effect of a market failure
the welfare loss of the society
31
Voluntary exchange means
People freely and willingly buying and selling G & S
The government will not receive tax revenue
Barter as the form of trade
People share their private property rights with others.
