Unit I and II Quizzes Flashcards
Because economics is “value free,” economists generally believe that people should be allowed to do whatever they please. T/F
False
Which good is not scarce for some people in some places in the world, but can become scarce under certain circumstances?
a. air b. water c. marijuana d. sugar
a. air
Opportunity cost is defined as “what you give up when you choose a particular course of action.” T/F
True
When economists say people are rational, we mean they always carefully calculate the consequences of their actions and almost never make mistakes or errors. T/F
False
To be effective, incentives must be compatible with ________________.
a. scarcity b. methodology c. theory d. self-interest
a. scarcity
Self interest + rationality means that people can be relied upon to respond to incentives in predictable ways. T/F
True
If a product’s money price is $0, there is still an opportunity cost associated with taking the product. T/F
True
Prices are “_______________ wrapped in _____________”
information, incentives
“Spontaneous order” means that someone has to actively manage a system in a top-down fashion in order for it to function well. T/F
False
Innovation refers to:
a. developing new products b. developing new technologies c. developing new production methods d. all of the above
d. all of the above
Dr. Watts loves Milk Stout beer and hates olives. This is a demonstration of which economic concept?
a. wants are unlimited b. means are scarce c. preferences are subjective d. more is preferred to less
c. preferences are subjective
In economics, “marginal” is best thought of as meaning:
a. extra or additional b. total c. minimal d. partial
a. extra or additional
Consumer surplus consists of the area between:
a. price and quantity b. demand and price c. supply and demand d. price and the x axis
b. demand and price
What happens to the demand for orange juice when the price of orange juice goes down?
demand does not change
In Europe, gas is expensive and people generally own fewer cars than they do in the United States. This is due to the fact that gas and cars are ________________.
complements
Many students reduce or cease consumption of Ramen when they graduate and land a high-paying job. For these students, Ramen represents a __________________ good.
inferior
What is equal at equilibrium?
quantity supplied and quantity demanded
When the price of a good increases, consumers cut back on low-value/low-importance uses of the good first, but will still use the good for high-value/high-importance uses. T/F
True
A shortage will not generally occur unless which of the following is true?
a. there are more buyers than sellers b. price is consistently above equilibrium c. price is consistently below equilibrium d. the market is not a live auction market
c. price is consistently below equilibrium
Consumers like low prices, and dislike price increases for the products they regularly consume. But what do consumers dislike even more than price increases?
a. shortages of a product b. surpluses of a product c. equilibrium d. rising marginal costs
a. shortages of a product
The sum of consumer and producer surplus is maximized when
the market is at equilibrium
In Excel, what do you use to “lock” a cell reference, so that the reference cell “stays put” when you fill a formula or function across other cells?
$
What the “factors of production” (inputs) listed in the lecture?
Land, labor, capital, technology, and entrepreneurship
What happens to the demand for chocolate when the price of chocolate increases?
nothing
Market equilibrium is described as “efficient” because only the highest ________________ uses of the good are undertaken, and only the lowest _______________ sources of supply are drawn upon.
value, cost
What metric is the best measure of a country’s standard of living?
real GDP per capita
How is real GDP per capita calculated?
real GDP divided by the population
A car engine produced by a supplier to Ford Motor Company is an example of
a. an inferior good. b. a final good. c. a common good. d. an intermediate good.
d. an intermediate good.
The sale of sugar will contribute to GDP when
a. the buyer is Krispy Kreme Doughnuts. b. the buyer is a mother who is baking cookies. c. the buyer is a Mexican food restaurant. d. the buyer is a grocery store chain.
b. the buyer is a mother who is baking cookies.
This summer you have a paid internship for Kia Motors (a Korean company) in Canada. For which nation, or nations, are you contributing to GDP? Assume you are a U.S. citizen.
Canada
What is the term for the value of a nation’s entire stock of assets?
national wealth
The difference between nominal and real GDP is that nominal GDP is valued in _______________ year prices and real GDP is valued in ________________ year prices.
current, base
The difference between nominal GDP and real GDP is nominal GDP
measures a country’s production of final goods and services at current prices, whereas real GDP measures a country’s production of all final goods and services at fixed historical prices.
A country experiences high GDP growth and low population growth will have a
high per capita GDP growth rate
Imported goods consumed in the U.S. are counted as part of the U.S. GDP. T/F
False
According to the “naive growth theory,” countries with high real GDP per-capita all have abundant domestic supplies and land, labor, and capital. T/F
True
The economically relevant factor shared in common by the “Angloshere” countries is their common law legal system. T/F
True
The picture of a busy Indian street scene reveals:
a. high levels of capital per worker b. low levels of capital per worker c. social customs that discourage use of new technologies d. a country crippled by limited access to natural resources
b. low levels of capital per worker
An economic system in which the government owns or controls all factors of production results in the absence of: (select all that apply)
a. markets b. prices c. trade in resources and capital goods.
all. Markets, prices, and trade in resources and capital goods.
Which economist predicted, in his 1920 book Socialism, that socialist economies would not function well due to the impossibility of ‘economic calculation?”
Ludwig von Mises
The northern European nation of Sweden was presented in the lectures as an example of a socialist economy in which the government owns most or all of the “means of production.” T/F
False
High levels of government corruption in a society (e.g. a high prevalence of bribery) act as a tax on entrepreneurship and investment. T/F
True