Chapters 1 - 7

Question 1

Utility vs. Disutility

Answer 1

Utility: the satisfaction one receives from consuming goods or services

Disutility: the adverse or harmful effects associated with a particular activity.

Question 2

3 Resources

Answer 2

Land: natural resources

Labor: physical & mental talents people contribute to the production

Capital: produced goods – used for further production (e.g. factories, computers)

Question 3

Entrepreneurship

Answer 3

The talent some people have for:

1. Organizing the resources of land, labor, & capital to produce goods
2. Seeking new business opportunities
3. Developing new ways of doing things

Question 4

Natural Unemployment

Answer 4

Unemployment caused by frictional & structural factors in the economy.

Natural Unemployment = Frictional Unemployment Rate + Structural Unemployment Rate

Question 5

Full Employment

Answer 5

When unemployment rate equals natural unemployment rate

Question 6

Services

Answer 6

Intangible items (e.g. lawn care, car repair, entertainment)

Question 7

Durable Goods vs. Nondurable Goods

Answer 7

Durable Goods: goods that are expected to last for more than 3 years (e.g. cars, ovens)

Nondurable Goods: goods that are not expected to last for more than 3 years (e.g. food)

Question 8

Structural Unemployment Rate

Answer 8

Unemployment due to structural changes in the economy that eliminate some jobs & create other jobs for which the unemployed are unqualified.

Question 9

Frictional Unemployment Rate

Answer 9

Unemployment due to natural frictions of the economy; caused by changing market conditions & represented by qualified individuals with transferable skills who change jobs

Question 10

Discouraged Workers

Answer 10

Former workers who are not actively looking for work and are not waiting to be called back to a job or report to a job (b/c they feel there are no jobs out there and/or not qualified for the jobs available).

*Not counted as unemployed workers

Question 11

4 Types of Unemployed

Answer 11

1. Job Loser: was employed, either fired or laid off
2. Job Leaver: quit their job
3. Reentrant: previously employed, hasn’t worked for some time, & currently re-entering the workforce
4. New Entrant: never held a full-time job for 2 weeks or longer & is now in the civilian labor force looking for a job

Question 12

Unemployed

Answer 12

• All persons who did not have jobs who made specific active efforts to find a job during the prior 4 weeks
• Persons not working & waiting to be called back to a job from which they have been temporarily laid off

Question 13

Employed

Answer 13

• All persons who did any work for pay or profit during survey reference week
• Did at least 15 hours of unpaid work in a family enterprise
• All persons temporarily absent due to illness, vacation, etc.

Question 14

Population In U.S. (2 Groups)

Answer 14

1. Under 16, in the armed forces, institutionalized

2. All others in population a.k.a. civilian noninstitutional population

Question 15

Base Year

Answer 15

The year that was chosen to be a point of reference or basis of comparison for prices in other years (a.k.a. benchmark year).

Question 16

Abstract

Answer 16

The process (used in building a theory) of focusing on a limited number of variables to explain or predict an event.