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Y1F ECON 1000 > 1.2: Two Big Economic Questions > Flashcards

1.2: Two Big Economic Questions Flashcards

1
Q

What are goods and services?
A) Objects that people value and use to satisfy needs
B) Physical items produced only for government use
C) Services provided exclusively by the government
D) Things people produce but don’t value

A

A) Objects that people value and use to satisfy needs

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2
Q

Which of the following is a factor of production?
A) Money
B) Bonds
C) Entrepreneurship
D) Stock market

A

Answer: C) Entrepreneurship

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3
Q

How is ‘land’ defined as a factor of production?
A) Only the soil used for agriculture
B) Natural resources like oil, gas, water, and forests
C) Anything that people create using technology
D) Buildings and machinery used by businesses

A

B) Natural resources like oil, gas, water, and forests

It’s the gifts of nature or natural resources

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4
Q

What is human capital?
A) Money saved for future investments
B) The stock market value of companies
C) The knowledge and skills people acquire from education and experience
D) A form of physical capital used by entrepreneurs

A

C) The knowledge and skills people acquire from education and experience

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5
Q

What income does labour earn?
A) Rent
B) Wages
C) Interest
D) Profit

A

B) Wages

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6
Q

What percentage of total income is earned by labour?
A) 50%
B) 30%
C) 70%
D) 90%

A

C

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7
Q

Which of the following is true about resource use efficiency?
A) It is always possible to make everyone better off
B) No one can be made better off without making someone else worse off
C) It guarantees equal distribution of wealth
D) It applies only to centrally planned economies

A

B

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8
Q

What does equity in economics refer to?
A) Efficiency in resource use
B) Getting the most from limited resources
C) Fair distribution of economic prosperity
D) Profitability of markets

A

C

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9
Q

How does trade benefit countries?
A) By allowing them to specialize in what they do best
B) By preventing them from borrowing and lending internationally
C) By eliminating competition
D) By reducing the variety of goods and services

A

A

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10
Q

What is globalization?
A) A local expansion of businesses
B) The limitation of international trade
C) The expansion of international trade, borrowing, lending, and investment
D) Government-controlled economic policies

A

C

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11
Q

What is a key question concerning climate change?
A) Should people be allowed to freely choose how they affect the environment?
B) How can countries reduce their natural resource production?
C) Can self-interest also align with the social interest in reducing carbon emissions?
D) Is entrepreneurship a cause of climate change?

A

C

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12
Q

What does market failure refer to?
A) A situation where all resources are allocated efficiently
B) A situation where the market fails to allocate resources efficiently
C) The dominance of a single economic actor in the market
D) A government-controlled market system

A

B

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13
Q

What is an externality?
A) The positive impact of economic decisions on society
B) The influence of a single actor on market prices
C) The impact of one person’s actions on the well-being of a bystander
D) A policy of government intervention in the economy

A

C

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14
Q

In a market economy, resources are allocated by:
A) Government agencies
B) The decisions of many firms and households interacting in markets
C) Centralized decision-making by the government
D) Global financial institutions

A

B

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15
Q

Which of the following describes market capitalism?
A) The government controls all resources
B) Individuals own land and capital and freely buy and sell in markets
C) All economic decisions are made by a central authority
D) Resources are allocated based on social interest alone

A

B

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16
Q

What does “What” refer to in the scope of economics?
A) The quantity of goods produced
B) The types of goods and services that are produced
C) The methods used to produce goods
D) The distribution of goods among countries

A

B) The types of goods and services that are produced

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17
Q

How is the question of “How” goods and services are produced addressed?
A) By analyzing consumer demand for products
B) By considering the technologies and resources used in production
C) By determining who benefits from the production
D) By measuring the social impact of production

A

B

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18
Q

Which factor influences the “For whom” question in economics?
A) The availability of natural resources
B) The methods used in production
C) The incomes people earn by selling their factors of production
D) The amount of goods available for production

A

C

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19
Q

What determines “What” goods and services are produced in an economy?
A) Government regulations alone
B) Consumer preferences and production costs
C) Only the availability of natural resources
D) The political system of the country

A

B

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20
Q

How does the income from factors of production influence “For whom” goods and services are produced?
A) It ensures everyone gets an equal share of resources
B) It allows individuals with higher incomes to consume more goods and services
C) It distributes goods equally among all individuals
D) It depends solely on government decisions

A

B

21
Q

In a market economy, “How” goods are produced is primarily determined by:
A) Government directives
B) The labor unions
C) The cost of production and available technologies
D) The profits of large corporations

A

C

22
Q

In the context of “For whom,” who consumes the goods and services produced in an economy?
A) Only the wealthy
B) Everyone receives an equal share
C) People according to their income levels
D) The government decides the distribution

A

C

23
Q

The question of “For whom” goods are produced in a centrally planned economy is decided by:
A) Individual consumers based on their income
B) Market demand and supply
C) The government, which allocates resources according to its priorities
D) Global trade organizations

A

C

24
Q

“What” goods and services are produced in a mixed economy is influenced by:
A) Only government decisions
B) A combination of market forces and government regulation
C) International trade agreements
D) Nonprofit organizations

A

B

25
Q

What we produce varies…

A

across countries and changes over time

26
Q

How we produce is described by…

A

the technologies and resources that we use.

27
Q

The resources used to produce goods and services are called factors of production, which are grouped into four categories:

A

Land, labour, capital, entrepreneurship

28
Q

Examples of land

A

Natural resources (Oil, gas, coal, water, air, forests, and fish)

29
Q

Examples of Labour

A

“The work time and work effort that people devote to producing goods and services”

Includes physical and mental efforts of all the people who work on farms and construction sites and in factories, shops, and offices

30
Q

Quality of labour depends on…

A

Human capital (which is the knowledge and skill that people obtain from education, on-the-job training, and work)

31
Q

Define Capital

A

The tools, instruments, machines, buildings, and other constructions that businesses use to produce goods and services are called capital

32
Q

What is entrepreneurship?

A

The human resource that organizes labour, land, and capital is called entrepreneurship

33
Q

People earn their incomes by…

A

selling the services of the factors of production they own

34
Q

Land earns?

A

Rent (income earned by land)

35
Q

Labour earn?

A

wages (income earned by labour)

36
Q

Capital earns?

A

Interest (income earned by interest)

37
Q

Entrepreneurship earns?

A

profit (income earned by profit)

38
Q

What component makes up the most of total income?

A

About 70 percent of total income

The incomes from land, capital, and entrepreneurship share the rest.

Stayed relatively consistent over the years (that labour earns most income out of the FOPs).

39
Q

What is a choice in self-interest?

A

You make a choice in your self-interest if you think that choice is the best one available for you.

40
Q

What is social interest?

A

An outcome is in the social interest if it is best for society as a whole.

41
Q

Define efficiency

A

the property of society getting the most it can from its scarce resources.

42
Q

Define equity

A

Fairness. The property of distributing economic prosperity fairly among the members of society.

43
Q

Define market economy

A

an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services.

44
Q

What is market capitalism?

A

An economic system in which individuals own land and capital and are free to buy and sell land, capital, and goods and services in markets.

45
Q

What is centrally planned socialism?

A

an economic system in which the government owns all the land and capital, directs workers to jobs, and decides what, how, and for whom to produce.

46
Q

How can Governments can sometimes improve market outcomes? (2 reasons)

A

To enforce property rights (the ability of an individual to own and exercise control over scarce resources)

To intervene in the economy.
(To promote efficiency: market failure and Promote equity)

47
Q

Define market failure

A

a situation in which a market left on its own fails to allocate resources efficiently.

48
Q

Define externality

A

the impact of one person’s actions on the well-being of a bystander

49
Q

What is Market power?

A

the ability of a single economic actor (or a small group of actors) to have a substantial influence on market prices

Y1F ECON 1000 (14 decks)

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