Test 1

Question 1

basic concern of economics

Answer 1

• to study the choices people make

- to use limited resources to produce goods and services to satisfy unlimited wants

Question 2

economics is a

Answer 2

social science

Question 3

when we are forced to make choices we are facing the concept of

Answer 3

scarcity

Question 4

the existence of alternative uses of a resource implies that it is

Answer 4

scarce

Question 5

a good for which the problem of scarcity does not exist

Answer 5

a free good

Question 6

fundamental economic questions that every economic system must answer

Answer 6

what
how
for whom

Question 7

opportunity cost

Answer 7

value of the best alternative forgone in making a choice

Question 8

economic resources used in production are called

Answer 8

factors of production

Question 9

3 types of factors of production

Answer 9

capital
labor
natural resources

Question 10

capital is best described as

Answer 10

a factor of production that has itself been produced

Question 11

human capital is

Answer 11

the set of acquired skills and abilities that workers bring to the production of goods and services

Question 12

knowledge that can be applied to the production of goods and services is

Answer 12

technology

Question 13

person who seeks to earn profits by finding ways to organize factors of production (and bear the risk) is called

Answer 13

an entrepreneur

Question 14

an economy is said to have a comparative advantage if it

Answer 14

has the lowest cost for producing a particular good

Question 15

the concept of comparative advantage is based on

Answer 15

relative opportunity costs

Question 16

the idea that in an economy that is on the production possibility curve, as output for one good increases, the cost of additional units will get higher and higher is the

Answer 16

law of increasing opportunity cost

Question 17

If all factors of production that are available for use under current market conditions are being utilized, the economy has

Answer 17

full employment

Question 18

the process through which an economy’s production possibilities curve is shifted outward is

Answer 18

economic growth

Question 19

demand is defined as

Answer 19

a schedule that shows how much will be purchased at various prices during a particular period assuming all other things are unchanged

Question 20

a decrease in the price of eggs will result in

Answer 20

greater amount of eggs demanded

Question 21

a shift in the demand curve to the right will

Answer 21

increase price and quantity

Question 22

the primary difference between a change in demand and change in the quantity demanded is

Answer 22

change in quantity demanded is a movement along the demand curve, and change in demand is a shift in the demand curve

Question 23

consumer preferences, prices of other goods, income, and demographic characteristics are

Answer 23

demand shifters

Question 24

if people demand more of product A when the price of product B falls, then A and B are

Answer 24

complements

Question 25

the price of eggs might go up if

Answer 25

the price of chicken feed increases

Question 26

if the demand curve shifts to the left then

Answer 26

a lower price and quantity would result

Question 27

the slope and location of the demand curve depends on

Answer 27

``` number of buyers tastes/preferences incomes price of related goods expectations demographics ```

Question 28

for most goods, purchases tend to rise with increases in buyers incomes and to fall with decreases in buyers incomes. such goods are known as

Answer 28

luxury goods

Question 29

upward sloping supply curve means

Answer 29

suppliers will want to sell more at higher prices

Question 30

position and slope of supply curve depends on

Answer 30

``` technology prices of factors of production (input) number of producers or sellers weather alternative uses gov regulations taxes and subsides expectations ```

Question 31

in the personal computer industry, the reason for the fall in prices and the increase in quantity after 1980 was

Answer 31

primarily due to technological change and an increase in the number of sellers

Question 32

a minimum price set above the equilibrium price is a

Answer 32

price floor

Question 33

a maximum price set below the equilibrium price is a

Answer 33

price ceiling

Question 34

scarcity

Answer 34

unlimited wants exceed limited resources

Question 35

opportunity cost

Answer 35

cost of highest valued alternative foregone use

Question 36

comparative advantage

Answer 36

opportunity cost is lower for the production of a particular good

Question 37

grades:

Answer 37

3 tests: 15 homework: 15 quizzes: 5 participation: 5 final: 30