quiz 1c

Question 1

what is absolute advantage?

Answer 1

who can make the most or the fastest of something?

Question 2

what is comparative advantage?

Answer 2

who can produce something with the lowest opportunity cost?

Question 3

what is an output problem?

Answer 3

the input time remains constant, output is variable.

Question 4

what is an input problem?

Answer 4

the output remains constant, input is variable

Question 5

what are the 3 steps to solve absolute and comparative problems?

Answer 5

1. identify if it is an output or input
2. solve for absolute advantage
3. solve for comparative advantage

Question 6

what is the output equation?

Answer 6

o.o.o - output = other, over

Question 7

what is the input equation?

Answer 7

i.o.u - input = other, under

Question 8

what is the economic system?

Answer 8

ownership of factors of production

Question 9

what is the economic system used for?

Answer 9

used to motivate, coordinate, and direct economic activity

Question 10

what is a command system?

Answer 10

socialism (state/public) & communism (private individuals)

Question 11

what is the market system?

Answer 11

capitalism & laissez-faire

Question 12

what are the 5 fundamental questions?

Answer 12

1. what will be produced?
2. how will goods and services be produced?
3. who will get the output?
4. how will the system accommodate changes?
5. how will the system promote progress?

Question 13

what are the 3 most important market system characteristics?

Answer 13

1. private property
2. freedom of enterprise
3. freedom of choice

Question 14

what are the other 9 market system characteristics?

Answer 14

4. self interest
5. competition
6. markets and prices
7. technology and capital goods
8. specialization
9. division of labor
10. geographic specialization
11. use of money (medium of exchange, barter)
12. active, but limited government

Question 15

how does supply and demand work in a circular flow chart?

Answer 15

businesses supply goods and services, households demand goods and services

Question 16

what is a business firm?

Answer 16

a business which finalizes products bought from resource owners

Question 17

what is the factor market?

Answer 17

resource owners sell productive products, and business firms buy productive products for a cost

Question 18

what is the product market?

Answer 18

resource owners buy good and services presenting a cost, but business firms earn a profit off of sales and services.

Question 19

what does terms of trade mean?

Answer 19

it is a combination of trading terms that is mutually beneficial for both parties involved in the trade.