Quiz 1

Question 1

Define Economics

Answer 1

a social science that studies how economic agents make CHOICES and how those choices affects the way RESOURCES are distributed in society.

Question 2

Objective of economics

Answer 2

wise use of resources

Question 3

List the economic agents (5)

Answer 3

1. individuals
2. households
3. firms
4. organizations
5. government

Question 4

Characteristics of choices (3)

Answer 4

• People have unlimited wants
• selfish vs self centered
• Rational Behavior (pro’s and con’s of every choice; and choose the option that would give the greatest satisfaction.)

Question 5

resources are scarce. list the 5 factors of production

Answer 5

Land- Rent
labor- wages
capital- interest
enterprise- profit

technology (machinery)-

Question 6

when making choices we are responding to ________

Answer 6

incentives

Question 7

every choice has a _________(sacrifice)

Answer 7

trade off
(the most important trade off is the opportunity cost)

Question 8

opportunity cost is important because:

Answer 8

it gives you the same or almost the same of level of satisfaction of the choice you made.

Question 9

divide the future into:

Answer 9

short term- 0-5yrs
medium 5-15 yrs
long 15- forever

Question 10

who wrote the first book of economics promoting free trade?

He is also know as the father of economics

Answer 10

1700
Adam smith
“the Wealth of nations”

Question 11

what system was based on protectionism?

Answer 11

Mercantile system (imports are discouraged and exports are encouraged)

Question 12

communism (karl marx)

Answer 12

a system that believes the government should intervene; they do not believe in social classes or private property

Question 13

mixed economy (John keynes)

Answer 13

a system that combines aspects of both capitalism and socialism

• government should intervene but businesses are their own entity.