Exam 1

Question 1

branch of philosophy that deals with moral principles, values, and rules governing right and wrong behavior.

Answer 1

ethics

Question 2

economy

Answer 2

ystem of production, distribution, and consumption of goods and services within a society or region.

Question 3

Milgram Experiment

Answer 3

psychological study conducted by Stanley Milgram in the 1960s that tested obedience to authority. Participants were instructed to administer electric shocks to a “learner” (an actor) to see how far they would go, even when they believed they were harming another person.

Question 4

The Challenger Explosion

Answer 4

1986 disaster in which NASA’s Space Shuttle Challenger exploded 73 seconds after liftoff due to a failure in the O-ring seals on its solid rocket boosters, resulting in the deaths of all seven crew members

Question 5

The Great Enrichment

Answer 5

erm coined by economist Deirdre McCloskey to describe the unprecedented economic growth and rise in global prosperity that began in the 18th century, primarily due to innovation, entrepreneurship, and market liberalism.

Question 6

Changes in Infant Mortality Rates

Answer 6

Refers to the historical decline in the number of infant deaths per 1,000 live births, largely due to advancements in medicine, hygiene, and public health.

Question 7

Changes in Literacy Rates

Answer 7

The increase in the percentage of people who can read and write over time, often linked to improvements in education systems, printing technology, and economic development

Question 8

Changes in Life Expectancy

Answer 8

The increase in the average number of years a person can expect to live, driven by medical advancements, improved sanitation, better nutrition, and reduced infant mortality.

Question 9

Money

Answer 9

A medium of exchange used to facilitate trade, typically in the form of coins, banknotes, or digital currency.

Question 10

trade

Answer 10

The exchange of goods and services between individuals, businesses, or countries, often leading to economic growth and specialization.

Question 11

Market Liberalism

Answer 11

An economic philosophy that promotes free markets, minimal government intervention, and individual economic freedom as key drivers of prosperity.

Question 12

Adam Smith

Answer 12

An 18th-century Scottish economist and philosopher known as the “father of modern economics.” His works, including The Wealth of Nations, laid the foundation for free-market capitalism.

Question 13

Innovation

Answer 13

The process of developing new ideas, products, or methods that improve efficiency, solve problems, or create value.

Question 14

Entrepreneurship

Answer 14

The act of starting and managing a business venture, often involving risk-taking, innovation, and the pursuit of profit.

Question 15

Profit

Answer 15

The financial gain obtained when revenue exceeds costs in a business or economic activity

Question 16

difference between entrepreneur and small business owner

Answer 16

entrepreneur is creating something brand new

Question 17

Economic Interdependence

Answer 17

condition in which individuals, businesses, or nations rely on each other for goods, services, and resources. This occurs in modern economies due to trade and specialization.

Question 18

Specialization

Answer 18

process by which individuals, businesses, or nations focus on producing a specific good or service in which they have an advantage, leading to increased efficiency and productivity.

Question 19

Private Property

Answer 19

A legal right that allows individuals or businesses to own, control, and transfer assets, such as land, buildings, and intellectual property. It is a fundamental concept in market economies.

Question 20

Currency

Answer 20

A medium of exchange issued by a government or central authority that facilitates trade, typically in the form of coins, paper money, or digital currency

Question 21

Trade

Answer 21

The voluntary exchange of goods, services, or resources between individuals, businesses, or countries, often driven by comparative advantage.

Question 22

Zero-Sum Game/Mentality

Answer 22

perspective that assumes one person’s gain comes at another’s loss, meaning total wealth or benefit is fixed. This contrasts with positive-sum situations, where all parties can benefit from economic growth and cooperation.

Question 23

Trust

Answer 23

social and economic concept referring to the confidence that individuals or institutions will act reliably, ethically, and as expected in agreements, transactions, or relationships.

Question 24

Land

Answer 24

factor of production that includes all natural resources, such as minerals, forests, water, and agricultural space, used to produce goods and services.

Question 25

Labor

Answer 25

human effort—physical or intellectual—used in the production of goods and services

Question 26

Capital

Answer 26

man-made resources used in production, such as machinery, tools, buildings, and financial assets, which help increase productivity and economic output.

Question 27

Tangible resources:

Answer 27

physical assets such as land, machinery, raw materials, and money

Question 28

Intangible resources

Answer 28

Non-physical assets such as patents, trademarks, brand reputation, knowledge, and human capital

Question 29

Opportunity Cost

Answer 29

The value of the next best alternative foregone when making a decision. It represents the cost of choosing one option over another.

Question 30

Transaction Cost

Answer 30

The costs associated with making an economic exchange

Question 31

Institutions

Answer 31

The formal and informal rules, norms, and structures that govern social, political, and economic interactions. Institutions include laws, governments, markets, and cultural traditions.

Question 32

Expectations

Answer 32

Beliefs or forecasts about future events, behaviors, or outcomes that influence decision-making in economics, politics, and society. Expectations shape consumer behavior, investment decisions, and policy-making.

Question 33

Incentives

Answer 33

Rewards or penalties that influence individual or collective behavior. Economic incentives include wages, taxes, and subsidies, while social incentives involve reputation, status, or peer pressure

Question 34

Why Do Institutions Emerge?

Answer 34

Institutions emerge to reduce uncertainty, establish order, and facilitate cooperation in societies. They help enforce contracts, protect property rights, manage resources, and resolve conflicts, making economic and social interactions more predictable and efficient.

Question 35

Feudalism

Answer 35

A medieval economic and social system in which land was owned by lords, worked by peasants (serfs), and governed through a hierarchy of obligations. Lords provided protection in exchange for labor or military service, and the system relied on localized authority rather than centralized state control.

Question 36

Mercantilism

Answer 36

An economic theory and system (16th–18th centuries) that emphasized state control of trade, accumulation of wealth (especially gold and silver), and a favorable balance of trade. It promoted colonial expansion, tariffs, and government intervention to strengthen national economies.

Question 37

Capitalism

Answer 37

economic system based on private ownership of the means of production, market competition, and the pursuit of profit. Prices, production, and distribution are largely determined by supply and demand rather than government control

Question 38

Socialism

Answer 38

conomic and political system in which the means of production (such as factories and resources) are collectively owned or controlled by the state or society. Socialism emphasizes wealth redistribution, economic equality, and state involvement in key industries

Question 39

Welfare Capitalism

Answer 39

orm of capitalism in which the government provides social welfare programs (such as healthcare, education, and unemployment benefits) to reduce economic inequality while maintaining a largely market-based economy. Examples include the Nordic model and social democracies.

Question 40

Objective Value

Answer 40

inherent worth of a good or service based on measurable factors such as production costs, labor, and materials, rather than personal preferences or market fluctuations. Some economic theories, like the labor theory of value, emphasize objective value.

Question 41

Market Value

Answer 41

price at which a good or service is bought and sold in the marketplace, determined by supply and demand. Market value fluctuates based on consumer preferences, competition, and external factors.

Question 42

Surplus Value

Answer 42

concept from Marxist economics referring to the difference between the value of goods produced by labor and the wages paid to workers. According to Karl Marx, capitalists extract surplus value as profit.

Question 43

Marginal Value

Answer 43

additional value or benefit gained from consuming or producing one more unit of a good or service. It helps determine how much a consumer is willing to pay for an extra unit or how much a producer benefits from increased production.

Question 44

Marginal Cost

Answer 44

The additional cost incurred by producing one more unit of a good or service. It helps businesses decide how much to produce, as production continues until marginal cost equals marginal revenue.

Question 45

Utility

Answer 45

A measure of the satisfaction, happiness, or benefit a person derives from consuming a good or service. It is a fundamental concept in economics that helps explain consumer choices.

Question 46

law of diminishing marginal utility

Answer 46

An economic principle stating that as a person consumes more units of a good or service, the additional satisfaction (marginal utility) derived from each extra unit decreases. For example, the first slice of pizza may provide great satisfaction, but by the fourth or fifth slice, the enjoyment diminishes.