Econ 102 - Exam 1 - Sample 1

Question 1

The importance of scarcity is that we have to make _________

Answer 1

Choices

Question 2

The economic problem is created by the fact that human wants exceed our _________.

Answer 2

Resources

Question 3

_____ (True/False) The nature of economics is that consumers are forced to make
choices, while businesses are not. Businesses therefore act to fulfill the choices of consumers and balance the economic cycle

Answer 3

False

Question 4

The four factors of productions are land, capital, labor, and __________.

Answer 4

Entrepreneur

Question 5

Capital is _____.

Answer 5

Factories, machines, similar goods used to make other goods

Question 6

Efficiency is getting the greater ______ per unit of _______.

Answer 6

Output, input

Question 7

(True/False) An economic good is anything that brings utility to at least one person

Answer 7

False

Question 8

Maria spends $100 on a ticket ot a concert and goes without telling her mother,l who did not want her to go, and who finds out from someone else that Maria went anyway. The opportunity cost of the concert to Maria is:

Answer 8

A. Just the $100

B. Just the loss of her mother’s trust

Question 9

The negative of utility is _______.

Answer 9

Disutlity

Question 10

_____ (True/False) For each good produced, there is only one combination of labor and
capital that can be used to create it.

Answer 10

False

Question 11

Economists say we make decision on the ________ when we base our decisions on the value of one more of something.

Answer 11

Margin

Question 12

Money cost are called ________ costs.

Answer 12

Explicit

Question 13

Economist believe that good choices are made on the basis of comparing benefits to ________ costs

Answer 13

Opportunity

Question 14

Scientist believe that theories can be ________.

Answer 14

Disproved, but not proved

Question 15

(True/FalseIn the scientific method, after our observation, we create a hypothesis, test them, an finally draw conclusions.

Answer 15

True

Question 16

(True/False) Economists have trouble using the scientific method because we have difficult with creating good tests.

Answer 16

True

Question 17

Globalize is defined as

Answer 17

Economic integration of nations

Question 18

(True/False) Columbus was not the first visitor to the Americas, but was the
first to economically exploit them. This was because he was the first to bring enough labor to make the exploration profitable.

Answer 18

False , he brought capital.

Question 19

(True/False) Protesters against globalization argue that big countries, such as
the US, manipulate the terms of trade with smaller countries in their favor

Answer 19

True

Question 20

(True/False) In the past (Vikings, Columbus, 1800s), globalization benefitted all
nations, but the current period of globalization may not be.

Answer 20

False

Question 21

We can shift the production possibilities frontier outward by:

Answer 21

Obtaining more resources

Improving technology

Question 22

(True/False) If we specialize and engage in international trade, the economy
might be able to consume, but not produce, at the point you answered in #22

Answer 22

True

Question 23

Portugal can produce 100 sheep if it produces only sheep and 100 bottles of olive oil if it produces olive oil. Italy can produce 5 sheep if it produces only sheep and 150 bottles of olive oil if it produces only olive oil.Today Portugal makes 50 sheep and 50 bottles of oil, and Italy makes 25 sheep and 75 bottles of oil. To maximize world production, a. Italy should specialize in sheep and Portugal should specialize in oil
b. Italy should specialize in oil and Portugal in sheep
produces only olive oil. Italy can produce 50 sheep if it produces only sheep and 150 bottles of olive oil if it produces only olive oil.
c. Italy should specialize completely in sheep, Portugal should produce some of both d. Italy should produce some of both and Portugal should specialize completely in oil e. none of the above

Answer 23

B.

Question 24

True or false = using the data from #26 suppose that after changing to maxizmie world production, Italy offers to trade 25 sheep for 25 bottles of oil. Portugal should make the trade if its only concern is making its country better off.

Answer 24

False

Question 25

(True/False) If portugual could produce 100 sheep or 2000 bottle of olive oil, instead of 100 as in #26, and everything else in question #26 was the same, then Portugual could still grain from trade, but Italy would not

Answer 25

False, they need to make a trade to make them better off.

Question 26

(True/False) Mercantilist believes that a country will get strong by exporting, but not importing.

Answer 26

True

Question 27

(True/False) Mercantilism is a theory that views trade as war, so that they view an
exchange where they get $80 and the other country gets $50 as a better exchange than one that give each country $100

Answer 27

True, they want to better off than the other country.

Question 28

(True/false) classical economists believe that all trade have winners and losers

Answer 28

False, they believe everyone is winners

Question 29

(true/false) Classical economists believe that to obtain the gains from trading, a
country must first specialize and trade

Answer 29

True, comparative advantage

Question 30

Different economic system

Answer 30

Come to different answers to the same basic economic questions

Question 31

Capitalism is called that because the ______ is privately owned

Answer 31

Capital

Question 32

(True/False) Since an individual cannot negotiate the price of a hamburger at
McDonald’s, no market for hamburgers can be said to exist

Answer 32

False

Question 33

(True/False) Economists dislike socialist systems because they are too
centralized, which makes it harder to make good decisions, and makes the consequences of bad decisions larger

Answer 33

True

Question 34

(True/False) Socialist economic systems do tend to be more efficient than
capitalist systems because of the greater degree of control exerted over the production process

Answer 34

False

Question 35

In a capitalistic country, ______ answer the basic economic question.

Answer 35

Market

Question 36

In a socialist country, _____ answer the economic question

Answer 36

Government

Question 37

(True/False) There are completely socialist countries in the world, but no
completely capitalist countries.

Answer 37

False

Question 38

(True/False) A public good, such as clean air, will be over-produced if left to the market.

Answer 38

False, they will be under produced

Question 39

(True/False) Asymmetric information exists in the market for used cars because
the buyer knows more than the seller about the car. This means that the seller will not get as high a price as might otherwise be expected.

Answer 39

False, the seller knows more than the buyer.

Question 40

If we know that free trade benefits everyone, both entire nations and their consumers, why is that seem people still believe in Mercantilism?

Answer 40

Mercantilist countries gets richer. American buys their stuff without caring if they are getting manipulated. Americans believed in free trade. Japan is getting richer by being mercantilist

Question 41

Explain how the concept of incentives relates to the ability of capitalist and socialist
countries to function efficiently.

Answer 41

Capitalist country is rewarded through hard work. The socialist country their is no incentive to work harder. People in DMV do not care about working harder.