Chapters 1-3

Question 1

The study of the choices that individuals and societies make in the production, distribution, and consumption of goods

Answer 1

Economics

Question 2

any system for the production, distribution, and consumption of goods and services

Answer 2

economy

Question 3

scholars of the production, distribution, and consumption of goods within an economy

Answer 3

economists

Question 4

the study of national and international economies and how these major economies are affected by large-scale choices and public polices

Answer 4

macroeconomics

Question 5

the study of specific components within a major economy and how the choices made by individuals, households, and businesses affect that economy

Answer 5

microeconomics

Question 6

seek to show the relationships among the various components of an economy

Answer 6

economic models

Question 7

ideas that attempt to explain how the economy works and why people respond the way they do

Answer 7

economic theories/principles

Question 8

seeks to help those making decisions to make wise choices

Answer 8

economic forecast

Question 9

a tangible item that people want and for which they will pay

Answer 9

good

Question 10

intangible goods produced by labor for which people expect to pay

Answer 10

services

Question 11

the human desire to have and use a certain good

Answer 11

want

Question 12

a mechanism that allows people to exchange goods

Answer 12

market

Question 13

a very large number of people to whom very large quantities of products are sold

Answer 13

mass market

Question 14

the quantity of a good for sale at a certain price under certain conditions

Answer 14

supply

Question 15

the amount of a good that is bought at a certain price under certain conditions

Answer 15

demand

Question 16

the first thing to understand about economics

Answer 16

all goods have to be worked for

Question 17

persons who work to provide goods

Answer 17

producers

Question 18

people who use goods

Answer 18

consumers

Question 19

the study of the material side of life in which everything has to be worked for and paid for

Answer 19

economics

Question 20

no goods are truly free, for someone has had to work to provide them: true or false

Answer 20

true

Question 21

there is not an unlimited supply of any good: true or false

Answer 21

true

Question 22

even in the most prosperous countries, there are never enough goods produced to satisfy everybody’s wants: true or false

Answer 22

true

Question 23

the habit of spending more than one can afford

Answer 23

prodigality

Question 24

a necessity; something difficult to live without

Answer 24

need

Question 25

a desire, a longing, or an appetite for something

Answer 25

want

Question 26

anything used in the production of goods and services

Answer 26

capital

Question 27

things produced for direct use by consumers

Answer 27

consumer goods

Question 28

the industrial skills and scientific methods that make possible efficient production

Answer 28

technology

Question 29

the worth that consumers attach to a good

Answer 29

value

Question 30

the usefulness of a good

Answer 30

utility

Question 31

the limited availability of a good

Answer 31

scarcity

Question 32

asked why rare items normally command high prices while necessities usually command low prices

Answer 32

Diamond-Water Paradox

Question 33

founder of the Austrian School of Economics/Proposed the diamond-water paradox

Answer 33

Carl Menger

Question 34

determines the value of any good

Answer 34

scarcity and utility

Question 35

original name of economics

Answer 35

political economy

Question 36

general rules guiding the production, distribution, and consumption of goods

Answer 36

laws of economics

Question 37

an economic system that advocates the building up of the state's treasury with the goal of accumulating as much bullion as possible; holds that a nation's wealth lies in its stockpiles of precious metals

Answer 37

mercantilism

Question 38

the difference in value of the goods that a county sells abroad compared to those it purchases from other countries

Answer 38

trade balance

Question 39

taxes that governments apply only to imported goods

Answer 39

tariffs

Question 40

the establishment of colonies and extensive territories created to benefit their mother country

Answer 40

imperialism

Question 41

a French group of economic critics known as some of the earliest advocates of laissez-faire economics

Answer 41

physiocrats

Question 42

"laissez-faire" meaning

Answer 42

let things alone

Question 43

the theories developed by economists of the 19th and early 20th centuries that stated the the free market was the best possible economic system

Answer 43

classical economics

Question 44

the founder of modern economics

Answer 44

Adam Smith

Question 45

the year Adam Smith published his book

Answer 45

1776

Question 46

the name of Adam Smith's book

Answer 46

The Wealth of Nations

Question 47

the separation of work into individualized tasks

Answer 47

division of labor

Question 48

the division of labor that allows the production of goods by workers doing the jobs they do best

Answer 48

specialization

Question 49

economic success or the condition of enjoying many goods, including services

Answer 49

prosperity

Question 50

the value of all the things that people own

Answer 50

wealth

Question 51

any work that contributes to the production of goods and services

Answer 51

labor

Question 52

diligent work directed by ingenious intelligence allowed to develop under conditions of freedom

Answer 52

the true source of prosperity

Question 53

the factors of production

Answer 53

natural resources labor capital entrepreneurship

Question 54

the fifth factor of production

Answer 54

information

Question 55

a system in which decisions involving the production, distribution, and consumption of goods are based on custom, hereditary, and caste

Answer 55

traditional economy

Question 56

a system in which a centralized authority determines the production and distribution of goods and services as well as things like savings, investments, and prices

Answer 56

command economy

Question 57

a system in which people are free to make their own economic choices

Answer 57

free enterprise

Question 58

when an economic system combines a good measure of free enterprise in some areas with heavy state regulation in others

Answer 58

mixed economy

Question 59

land and other resources that can be used in the production process

Answer 59

natural resources

Question 60

an economic system that provides barely enough to keep a society alive

Answer 60

subsistence economy

Question 61

the system in which the majority of a nation's capital is owned and controlled by private individuals and businesses

Answer 61

private capitalism

Question 62

a system in which the owner of much of the nation's capital is a powerful, centralized apparatus called the collectivist state

Answer 62

state capitalism

Question 63

anyone who owns producer goods or owns a share of some business that produces goods

Answer 63

capitalist

Question 64

the intelligent direction and supervision of natural and human economic resources

Answer 64

entrepreneurship

Question 65

a person who undertakes the management and financial risk of an economic enterprise

Answer 65

entrepreneur

Question 66

one of America's earliest capitalist

Answer 66

E. I. du Pont

Question 67

property rights, freedom of enterprise and competition in a market environment, and limited government

Answer 67

capitalism's basic components

Question 68

the types of property

Answer 68

real, financial, or intellectual

Question 69

make the majority of economic decisions in the free market

Answer 69

households and private business

Question 70

illustrates how resources and products move through the market

Answer 70

circular flow model