Econ 102 - Exam 1 - Sample 1 Flashcards
The importance of scarcity is that we have to make _________
Choices
The economic problem is created by the fact that human wants exceed our _________.
Resources
_____ (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
False
The four factors of productions are land, capital, labor, and __________.
Entrepreneur
Capital is _____.
Factories, machines, similar goods used to make other goods
Efficiency is getting the greater ______ per unit of _______.
Output, input
(True/False) An economic good is anything that brings utility to at least one person
False
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:
A. Just the $100
B. Just the loss of her mother’s trust
The negative of utility is _______.
Disutlity
_____ (True/False) For each good produced, there is only one combination of labor and
capital that can be used to create it.
False
Economists say we make decision on the ________ when we base our decisions on the value of one more of something.
Margin
Money cost are called ________ costs.
Explicit
Economist believe that good choices are made on the basis of comparing benefits to ________ costs
Opportunity
Scientist believe that theories can be ________.
Disproved, but not proved
(True/FalseIn the scientific method, after our observation, we create a hypothesis, test them, an finally draw conclusions.
True
(True/False) Economists have trouble using the scientific method because we have difficult with creating good tests.
True
Globalize is defined as
Economic integration of nations
(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.
False , he brought capital.
(True/False) Protesters against globalization argue that big countries, such as
the US, manipulate the terms of trade with smaller countries in their favor
True
(True/False) In the past (Vikings, Columbus, 1800s), globalization benefitted all
nations, but the current period of globalization may not be.
False
We can shift the production possibilities frontier outward by:
Obtaining more resources
Improving technology
(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
True
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
B.
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.
False
(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
False, they need to make a trade to make them better off.
(True/False) Mercantilist believes that a country will get strong by exporting, but not importing.
True
(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
True, they want to better off than the other country.
(True/false) classical economists believe that all trade have winners and losers
False, they believe everyone is winners
(true/false) Classical economists believe that to obtain the gains from trading, a
country must first specialize and trade
True, comparative advantage
Different economic system
Come to different answers to the same basic economic questions
Capitalism is called that because the ______ is privately owned
Capital
(True/False) Since an individual cannot negotiate the price of a hamburger at
McDonald’s, no market for hamburgers can be said to exist
False
(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
True
(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
False
In a capitalistic country, ______ answer the basic economic question.
Market
In a socialist country, _____ answer the economic question
Government
(True/False) There are completely socialist countries in the world, but no
completely capitalist countries.
False
(True/False) A public good, such as clean air, will be over-produced if left to the market.
False, they will be under produced
(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.
False, the seller knows more than the buyer.
If we know that free trade benefits everyone, both entire nations and their consumers, why is that seem people still believe in Mercantilism?
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
Explain how the concept of incentives relates to the ability of capitalist and socialist
countries to function efficiently.
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.
