econ first quiz

Question 1

economics

Answer 1

the science that deals with the production, distribution, and consumption of goods and services, or the material welfare of humankind

the study of how people choose to use their limited resources to satisfy their unlimited wants

Question 2

macroeconomics

Answer 2

studies national income
analyzes total employment in economy
deals with aggregate decisions
studies overall price level
analyzes aggregate demand and aggregate supply
performance, structure, behavior,

Question 3

microeconomics

Answer 3

studies individual income
analyzes supply and demand of labor
studies individual prices

Question 4

scarcity

Answer 4

the natural phenomenon arising from the fact that all the world’s resources are physically limited in quantity
means we have to make choices (trade offs and opportunity cost

Question 5

tradeoff

Answer 5

the exchange of one benefit or advantage for another that is thought to be better

Question 6

opportunity cost

Answer 6

the value of the next best alternative to any decision you make

Question 7

production possibilities curvbe

Answer 7

represents all the different combinations of two goods that can be produced
inside curve is inefficient outside curve is impossible and on the curve is efficient

Question 8

adam smith

Answer 8

wealth of nations
division of labor competition mercantilism free trade
capitalist

Question 9

division of labor : adam smith

Answer 9

inscreases productivity

Question 10

competition ；adam smith

Answer 10

acts as the invisible hand that guides resources to their most productive uses

Question 11

mercantilism ；adam smith

Answer 11

stifles economic growth

Question 12

free trade : adam smith

Answer 12

increases economic growth

Question 13

mercantilism

Answer 13

focused on building a nation’s strength
government controlled trade
aims to increase net exports to create wealth, often through colonization

Question 14

capitalism

Answer 14

focused on earning profits
free trade
aims to increase productivity to create wealth

Question 15

laissez-faire

Answer 15

let do let it be
a doctrine opposing governmental interference in economic affairs beyond the minimum necessary to maintain peace and property rights

Question 16

comparative advantage

Answer 16

if countries specialize in producing goods where they have a lower opportunity cost, then there will be an increase in economic welfare

Question 17

voluntary exchange

Answer 17

a trade that occurs when both people believe they will benefit from the trade
an increase in wealth fro all parties

Question 18

trade

Answer 18

voluntary exchange of goods and services
people must be willing to bear a cost

Question 19

incentives

Answer 19

something that incites an action or greater effort

Question 20

protectionism

Answer 20

shielding a country’s domestic industries from foreign competition by taxing imports

Question 21

equity efficiency tradeoff

Answer 21

equity-efficiency tradeoff occurs when maximizing the productive efficiency of the market leads to less equitable wealth distribution.

Question 22

positive economics

Answer 22

focuses on understanding and describing economic phenomena in a factual manner
verifiable data

Question 23

normative economics

Answer 23

focuses on offering value based solutions to economic issues
how things should or sholmd’t be

Question 24

thinking at the margin

Answer 24

to think about your next step forward
rational decision making

Question 25

what question was Adam Smith seeking to answer when he wrote The Wealth of Nations

Answer 25

why are some countries wealthier than others

Question 26

why is it important to trade ecen when a country has an absolute advantage

Question 27

why do most economists oppose protectionalism

Answer 27

trade wars can occur and prohibit more trade from occurring
if this happens the supply and demand chain is broken

Question 28

5 key economic principels

Answer 28

resources are limited (scarcity)
people must choose (trade-offs)
choices involve costs (opportunity cost)
voluntary exchange creates value (trade = value)
people typically seek their own self-interest (incentives)