Chapter 1

Question 1

What is included in her scarce resources

Answer 1

Labor

Land

Machinery

Question 2

With regards to scare us resources we must make choices which are trade-offs economics is concerned with what

Answer 2

1. How we make choices

2. How we can ensure we use our resources efficiently

Question 3

How can trade make everyone better off

Answer 3

1. Each nation exports it specialized products
2. Import other countries specialized products

This increases economic efficiency

Question 4

What does it mean to increase economic efficiency

Answer 4

Land labor machinery or put two it’s best to use

Ie specialization

Question 5

How are my kids usually good way to organize economic activity

Answer 5

1. Allocate scarce resources among buyers and sellers
   - through decisions made by households and firms
   - invisible hand guides them adjusting demand and prices

Question 6

Mergen people think at the margin what does this mean

Answer 6

Evaluating the extra benefit of a particular option

Marginal benefit should outweigh the marginal cost

Question 7

How can government sometimes improvement market outcomes

Answer 7

1. Sometimes we have market failure (when the market economy fails to provide the correct amount of some products)
   - too many of one product
   - not enough of another product

Question 8

How does the government help I hope when there’s market failure

Answer 8

They provide the services and goods that market failure would prove to give shortages

• such as: national defense
  Basic scientific research
  Government programs fighting poverty and income inequality

Question 9

What happens when too many of one product is being produced

Answer 9

Too much of a desirable good is being produced when producers are not held responsible for all the marginal cost of production
Ie environmental costs due to pollution

Producers not held responsible will oversupply this equals pollution levels too high
- this is called externality

Question 10

How can the government help with externality

Answer 10

The government can control the externalities by imposing laws and regulations and fines

Question 11

What is another way other than market failure that the government can sometimes improve market outcomes

Answer 11

1. Property rights
   - are strictly protected and violations or promptly dealt with by the government
   - this is for a physical property as well as intellectual property

Question 12

What is the third way the government can sometimes improve market conditions

Answer 12

Government could eliminate forces leaving to reduce competition in the economy

Question 13

How can government and the many forces leaving to reduce competition in the economy

Answer 13

1. Reduce competition could lead to a monopoly which would equal higher prices and less goods potentially
2. Ensure that Canadians are not paying more for cross-border projects

(The price gap between Canada and USA)
- unjustified cross-border price discrepancies

Question 14

A country standard of living depends on what

Answer 14

It’s productivity or its ability to produce goods and services

Question 15

If they have greater productivity what does the country have besides a higher standard of living

Answer 15

Higher wages, hire employment levels

This leads to an improvement in their standard of living

Question 16

What can improve countries standard of the Living

Answer 16

Further enhance standard of living when the countries specialize and training

Question 17

How can policymakers raise productivity

Answer 17

1. Improved access to best quality of education
2. Technology
3. Machinery for production

Question 18

What happens when government prints too much money

Answer 18

Inflation occurs

1. Government prints money
2. People spend more money therefore there’s a increase in demand
3. Employers hire more people therefore there’s a decrease in unemployment
4. When market prices reach equilibrium
   - prices decrease
   - demand decreases
   - unemployment increases

Question 19

What direction is The unemployment rate and inflation rate move

Answer 19

They move in opposite directions one increases the other decreases

Question 20

What happens when employment increases

Answer 20

More people have jobs
But the average income level falls

this can equal depressed spending levels

Question 21

What happens when there’s less spending

Answer 21

There is a rise in the level of inventories for suppliers

This equals selling products at a discount

which equals less revenue

Which in turn lowers the nations price levels which equals lower inflation

Question 22

Why does social science of economics exist? Two reasons

Answer 22

1. Our demand for goods and services are virtually unlimited

2. Resources are scarce