test1 Flashcards
The term “ceteris Paribus” means that number of relevant variables are assumed to be constant.
True
The GDP of the United States include production by foreign-owned firms that are located in the USA.
True
The existence of alternative uses for a resource implies it is scarce.
False
Rent, interest, wages, and profit are the payments to the faour factors of production-land, capital, labor, and entrepreneurship, respectively.
True
A change in the quantity supplied of a commodity can only be caused by change in the price of the commodity.
True
If the terms of trade are not between the opportunity cost of two countries, then the two countries will have no reason to trade.
True
A change in the demand for a commodity is caused by any factors other than the price of the commodity.
True
Specialization and international trade increase total world output.
True
Economics does not include the study of how to improve society.
False
A capitalistic economy does not require the institution of private property as long as markets are competitive.
False
Opportunity cost is the value of the alternative purchased.
False
“Capitalism” describes an economic system that uses vast amounts of capital.
False
Normative statements are expression of facts
False
Marginal analysis means that decision-makers compare the extra benefits with the extra costs of a specific choice.
True
The entrepreneur’s sole function is to combine other resources (land, labor, and capital) in the production of some good or service.
True
Economic growth is the increase in the per capita productive capacity of the nation.
True
A “mixed economy” involves both private and public decision making on how, what, and for whom.
True
Although sleeping in on a work day or school day has an opportunity cost, sleeping late on the weekend does not.
False
Specialization may expand total output even though the individuals involved may have identical abilities.
False
other things equal, an increase in productivity will shift the supply curve rightward.
true
If every country specialized in what it produces best, more will be produced than if each country tries to produce everything to meet its need.
True
comparative advantage refers to the ability to produce output with fewer resources than any other country.
True
A theory or model is a simplification of reality, much in the same way that a road map shows only those features needed to get from one point to another.
True
Nations have the same quantities and qualities of economic resources and they also have the same combinations to these economic resources.
False
If there are unused resources an economy is operating inefficiently
True
Economists do not view money as capital
True
Education and training are examples of investments in human-capital.
True
The primary purpose of NAFTA is to:a. Encourage the development of the Mexican and Canadian economiesb. Protect U.S. and Canada workers from unfair competition from Mexicoc. Increase employment and income in Mexico, Canada and the U.S. by encouraging free traded. Ensure that there are no losers as the result of trade agreements between Mexico, Canada, and the U.S.e. None of the above
c. Increase employment and income in Mexico, Canada and the U.S. by encouraging free trade
. An answer to the question “What goods are produced?” determines:a. who receives the goods that are producedb. how tastes and preferences are determinedc. how resources are combined in the production of goodsd. the quantity of society’s natural resource endowmentse. the types and quantities of goods and services produced
e. the types and quantities of goods and services produced
Macroeconomics is concerned with:a. the operation of a particular firmb. the labor marketc. the individual consumer behaviord. the entire economye. a detailed examination of how price and output decisions are made in specific markets
d. the entire economy
A decrease in supply is caused-by:a. a decrease in resource pricesb. an increase in the number of sellers in the marketc. suppliers’ expectations of higher prices in the futured. an advancement in the technology for producing the goode. a decrease in the price of a good using the same resources.
c. suppliers’ expectations of higher prices in the future
All of the following statements are true EXCEPT:a. economic efficiency cannot be achieved without technical efficiencyb. technical efficiency can be achieved without economic efficiencyc. technical and economic efficiency may be achievable at the same timed. in most cases, economic efficiency is socially more desirable than technical efficiencye. technical efficiency is dependent on consumer preferences whereas economic efficiency is not
b. technical efficiency can be achieved without economic efficiency
Comparative advantage refers to:a. The ability of a country to produce a specific good with fewer resources than another country.b. A country’s monopoly power in the world market for a specific good.c. When a country’s production curve is curved.d. All of the abovee. A distribution curve
a. The ability of a country to produce a specific good with fewer resources than another country
In terms of a society’s production-possibilities curve, the optimum of best combination of output, if it exists, is always found at a point locate somewhere:a. inside the curveb. outside the curvec. on or inside the curved. on or outside the curvee. on the curve
e. on the curve
In the simple circular-flow model, there are:a. two flows–a physical flow of goods and resources a dollar flowb. two sets of markets–products markets and resources marketsc. two types of suppliers and demanders–households and business firmsd. two sets of prices established–one for final goods and services and one for resourcese. all of the above
e. all of the above
A “mixed economy”, means one that:a. is confused and fouledb. utilizes a variety of production techniquesc. enjoys a two-party systemd. combines executive legislative, and judicial branches in governmente. none of the above
e. none of the above
The government sector is synonymous with the:a. private sectorb. public sectorc. household sectord. business sectore. foreign sector
b. public sector
The law of demand operates because:a. people can afford to buy less of a good if its price increasesb. people can afford to buy more of a good if its price increasesc. the more of a good you consume the more satisfaction it providesd. when the price of one good decreases it increases relative to the prices of other goodse. When the price of one good increases it decreases relative to the prices of other goods
a. people can afford to buy less of a good if its price increases
An increase in supply, with no change in demand, will lead to in equilibrium quantity and in equilibrium price:a. an increase; an increaseb. an increase; a decreasec. a decrease; an increased. a decrease; a decreasee. no change; no change
b. an increase; a decrease
The concept of “economic man” implies that:a. people want to produce the most goods for societyb. people are rational and motivated by economic forcesc. people are a product of the economic environment in which they lived. people are economical and like to save moneye. people have no concerns except economic ones
b. people are rational and motivated by economic forces
A principal objective of GATT is to:a. equality in the distribution of incomeb. economic growthc. protect import-competing nationsd. economic stabilitye. reduce barriers of trade
e. reduce barriers of trade