Chapter 1: Welcome to Economics

Question 1

Division of Labor

Answer 1

the way in which work required to produce a good or service is divided into tasks performed by different workers

Question 2

Economics

Answer 2

Study of how humans make choices under conditions of scarcity

Question 3

Economies of Scale

Answer 3

When the average cost of producing each individual unit declines as level of production increases

Question 4

Scarcity

Answer 4

When demand exceeds available supply

Question 5

Specialization

Answer 5

When workers or firms focus on particular tasks for which they are well-suited, or have an advantage, within overall production process

Question 6

Example: What is “Division of Labor” at B+C?

Answer 6

Login/scan/deliver by admin, preparation by staff, review by CPA

Question 7

Core Competency

Answer 7

Focus of a business on one or several products; often a successful strategy

Question 8

Microeconomics

Answer 8

Branch of economics that focuses on actions of individual agents within the economy (households, workers, businesses)

Question 9

Macroeconomics

Answer 9

Branch of economics that focuses on broad issues such as growth, unemployment, inflation, and trade balance

Question 10

Fiscal Policy

Answer 10

Economic policies that involve government spending and taxes

Question 11

Monetary Policy

Answer 11

Economic Policy that involves altering interest rates, availability of credit in the economy, and the extent of borrowing

Question 12

Goods and Services Market

Answer 12

Market in which firms are sellers of what they produce, and households are buyers

Question 13

Labor Market

Answer 13

Market in which households sell their labor as workers to businesses

Question 14

Theory / Model

Answer 14

A simplified representation of a situation to help us understand it (theory is more abstract, model is applied)

Question 15

Command Economy

Answer 15

Economy is which economic decisions are passed down from government authority, and resources are owned by the government

Question 16

Examples of Command Economies

Answer 16

Cuba, North Korea, Venezuela, former Soviet Union (Russia is a mixed economy), formerly China (now a mixed economy)

Question 17

Exports

Answer 17

Goods and services produced domestically, sold abroad

Question 18

Imports

Answer 18

Goods and services made abroad, sold domestically

Question 19

Globalization

Answer 19

Trend in which buying and selling in markets have increasingly crossed national borders
Expanding economic, political, and cultural connections of people around the world. Drivers are lower transportation costs, increased telecommunications, and international treaties and trade agreements.

Question 20

GDP

Answer 20

Gross Domestic Product. Value of all goods and services produced in a country in one year.

Question 21

Market

Answer 21

Interaction between potential buyers and sellers

Question 22

Market Economy

Answer 22

Economic decisions are decentralized, resources are owned by private individuals, businesses supply goods and services

Question 23

Private Enterprise

Answer 23

System where the means of production (resources and businesses) are owned by private individuals, and businesses supply goods and services based on demand

Question 24

Traditional Economy

Answer 24

Economy in which what you produce is what you consume (typically agricultural). Little economic growth/development.

Question 25

Underground Economy

Answer 25

Market in which buyers and sellers make transactions in violation of government regulation.