Econ 102 - Exam 1 - Sample 2

Question 1

Things that are valuable are things that are ____

Answer 1

Scarce

Question 2

Because of the answer to question 1, we have to make _____

Question 1 things that are valuable are things that are scarce

Answer 2

Choices

Question 3

A good is anything that

Answer 3

Creates utility for at least one person

Question 4

Capital is defend as

Answer 4

Anything used to make a good

Question 5

The four factors of production are capital, land, labor, and _______.

Answer 5

Entrepreneur

Question 6

Maria spends $100 on a ticket to a concert and goes without telling her mother, 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 6

The $100 she spent

The loss of her mother’s trust.

Question 7

Good choices involves comparing

Answer 7

Opportunity costs to benefits.

Question 8

Globalization is defined as:

Answer 8

The economic integration of nations

Question 9

(True/False) Globalization benefitted everyone in Columbus’ time, but today it creates winners and losers.

Answer 9

False

Question 10

(True/False) Globalization has happened historically when new technologies change the
nature of business relationships between countries.

Answer 10

True

Question 11

(True/False) Scientists believe that it is possible to disprove theories, but not to prove them
correct.

Answer 11

True

Question 12

On the _____ is the economist’s word for making decisions based on the costs or benefits of one more of something.

Answer 12

Margin

Question 13

(True/False) The most common reason goods are made in different countries in different
ways is that the mix of labor and capital is different in the different countries

Answer 13

True

Question 14

_______ means getting the most output per unit of input

Answer 14

Efficiency

Question 15

_________ _______ is the economist’s phrase for a person’s education, training, and skills

Answer 15

Human Capital.

Question 16

(True/False) When England gained colonies such as the US and India, it was able to facilitate
free trade among them, and switched from Mercantilism to Comparative Advantage as a result. That success is why economists believe in free trade.

Answer 16

False

Question 17

MErcanitlists believe that to gain from trade, a country must:

Answer 17

Export, but not import.

Question 18

(True/False) Mercantilism is not believed or used by any countries today.

Answer 18

False

Question 19

(True/False) Mercantilism argues that trade is a form of war, no different from using armies

Answer 19

True

Question 20

The theory of comparative advantage believes that to gain from trade, a country must:

Answer 20

Specialize and trade

Question 21

_____ is about making your country strong, _____ is about making everyone better off.

Answer 21

Mercantilism, comparative advantage

Question 22

(True/False) The same three basic economic questions apply to all economies, regardless of
their “ism

Answer 22

True

Question 23

Capitalism is called that because the ______ is previously owned

Answer 23

Capital

Question 24

In socialism, the ____ creates the answers ot the basic economic questions.

Answer 24

Government

Question 25

(True/False) Because you cannot negotiate with Albertson’s shopping there is not technically a market.

Answer 25

False

Question 26

A _______ occurs when someone pays a cost for for someone else’s choice.

Answer 26

Externality

Question 27

A common property resource will be:

Answer 27

Over used

Example: People chopped the trees when it was for common property resource

Question 28

A public good is (among other things):

Answer 28

Nonrivalous

Question 29

Adam Smith’s theory and the US deceleration of Indepednecne are based on the philosophy of John Locke which says that:

Answer 29

Government exists to protect people’s property rights

Question 30

(True/False) If the price of a good is set below the equilibrium price, a shortage of the good
will result

Answer 30

True

Question 31

(True/False) Demand and supply both increase by moving to the right.

Answer 31

True

Question 32

If free trade can benefit everyone, why is it that some countries continue to pursue mercantilist philosophies?

Answer 32

If countries use Mercantilist philosophies they are manipulating trade in such a way that it will advantage them and make their country richer.

Question 33

(Essay) why is capitalism preferred by economists over socialism

Answer 33

Capitalism gives us incentive and gives us decentralized. In capitalism they make their own decision.

More incentive in capitalism
Less incentive in socialism since their is no reason to work harder when you wont be awarded more.