MIDTERM Flashcards
In a market economy, economic activity is coordinated by_____
prices
The quantity supplied of a good varies __ with its price.
directly
The reason we cannot all live in beach-front houses is that the prices are too high.
false
The true cost of anything is…..
the value it has in alternative uses
High prices are usually caused by greedy sellers
false
Prices responding to supply and demand cause natural resources to move from places where they are ___________, to places where they are ________.
abundant; relatively scarce
With price controls, society can get things we want without having to pay the full cost
false
Economics is not moral pronouncements or political creeds about the economy. Rather economics is…
a way of living and finding a way to keep the economy balanced based on cause and effect.
In Chapter 4 the author uses a story about a shortage of soviet mining equipment to illustrate the concept of….
individual rationality versus systematic rationality
Scarcity necessitates rationing. If rationing is not done through a price mechanism, name an alternative method of how rationing takes place…..
first come, first serve
Making something artificially cheap usually means it will be….
wasted
Politicians can use laws to bring down the cost of medical care
false
In a market economy, pieces rise because the amount demanded ________ the amount supplied at existing prices
exceeds
A price ceiling is….
a limit on how high a price is allowed to fall
Rent control typically ______ the overall supply of housing.
reduces
Rent control typically leads to ____ rents
more controlled
Price controls are generally easier than cutting back on printing and spending for politicians.
true
Which of the following is not a result of price controls?
money printing
Price AND losses are equally important from the standpoint of forcing companies and industries to use scarce resources efficiently.
true
John D. Rockerfeller built standard oil into the biggest and most profitable enterprise in the petroleum industry by…..
drastically reducing the cost of delivering finished products to consumers
The principal beneficiaries of lower prices made possible by the more efficient allocation of scarce resources which have alternative uses are….
consumers
Give an example from the chapter of a company which failed to keep up with changes.
A&P grocery stores
Once a company is bigger and has more money than its rivals, it no longer needs to adapt to market conditions.
false
Once a factory is built, it is fairly easy to run it profitably.
false
