Economics 101: Principles of Microeconomics Ch 8. Scarce Economic Resource Markets

Economic Resources

the factors used in producing goods or providing services

Economy

a system of institutions and organizations that either help facilitate or are directly involved in the production and distribution of goods and services

Land

all real estate and all natural resources on or in it

Capital

anything made by human beings that can be used in the production of goods or in providing services

Technology

the use of scientific and technical concepts and technical concepts and techniques that helps you improve the quantity and quality of the production of goods and services you provide

Which of the following is NOT a capital resource?

1. Equipment

2. Machinery

3. A factory

4. Copper

Copper

Which of the following is the best explanation of economic resources?

1. Land, labor and technology

2. Resources used in the economy

3. All factors used in the production of goods or services

4. Land and capital

All factors used in the production of goods or services

Which resource involves the use of research and study to solve problems and improve processes?

1. Capital goods

2. Labor

3. Technology

4. Management

Technology

XYZ Manufacturing uses a geo-thermal heat pump in order to heat their building in the winters. What would this thermal heat resource be considered?

1. Land

2. Capital

3. Human

4. Natural

Land

Which of the following is NOT a financial resource?

1. Gold

2. Stocks

3. Bonds

4. Fiat money

Gold

Resource Market

market where a business can go and purchase resources to produce goods and services

Capital

human-made asset that is used to generate income by helping transform labor and other resources into goods or services

Entrepreneurship

ability to take risks and the ability to combine capital, land, and labor to create a business enterprise

Which one of the following is NOT a resource found in a resource market?

1. Consumer products

2. Capital

3. Labor

4. Natural resources

Consumer products

Which of the following is NOT related to capital as a resource?

1. Gas

2. Machinery

3. Office buildings

4. Factories

Gas

How are households and businesses related?

1. Businesses supply resources to households.

2. Households and businesses compete in the resource market.

3. Households supply resources to businesses.

4. Households and businesses compete in the stock market.

Households supply resources to businesses.

Which of the following is NOT related to land as a natural resource?

1. Water

2. Oil

3. Timber

4. A factory on the land

A factory on the land

What is a resource market?

1. A market for intermediary products used in finished products.

2. A market for natural resources.

3. A real estate market.

4. A market that provides businesses the resources they need to produce goods and services

A market that provides businesses the resources they need to produce goods and services

Resources (factors)

goods and services required to make a finished a product for a sale on the product market

Resource Markets

• they are subject to their own markets

• the market at which firms buy resources from households

Product Market

the market at which households buy goods from firms

Circular Flow Model

chart this flow of money and resources through the economy

Ways That Household Contribute To Resource Markets

• raw materials

• labor

• land

• capital

What model is used to demonstrate markets and the flow of goods between firms and households?

1. Demand

2. Supply

3. Circular Flow

4. Production Possibilities

Circular Flow

Who is normally the producer in a resource market?

1. Both

2. Households

3. Firms

4. Neither

Households

What is the name of the market in which households buy goods from firms?

1. Capital

2. Labor

3. Resource

4. Product

Product

Which is NOT an example of a resource supplied by a household?

1. Capital

2. Cell phones

3. Raw materials

4. Labor

Cell phones

Susie goes to XYZ Grocery store and walks around to look at all the items that she has available to her for purchase. What is Susie participating in?

1. Demand Market

2. Supply Market

3. Product Market

4. Resource Market

Product Market

Labor

any sort of job, whether it’s physical labor, sitting at a desk, or operating a vehicle

Labor Markets

when labor is exchanged for wages just as if it were any other commodity

If the supply curve for registered nurses were to move to the left, how would the labor market for nurses LIKELY be affected?

1. More nurses would get raises.

2. More nurses would be fired.

3. More nurses would be hired.

4. More nurses would leave the profession.

More nurses would get raises.

If the government were to give millionaires a tax cut, what would LIKELY happen to the number of potential CEOs?

1. The number of CEOs would stay the same.

2. The number of CEOs would increase.

3. The number of CEOs would decrease.

4. The number of CEOs would greatly fluctuate.

The number of CEOs would increase.

Based on salary, which role LIKELY represents the lowest supply of able workers?

1. Factory worker

2. Executive chef

3. Law enforcement officer

4. Chief executive officer

Chief executive officer

In the United States, there are very few job openings for rocket scientists, and all of these openings require a long list of qualifications. Where would you expect the equilibrium point for rocket scientists to be in the U.S.?

1. High price, low quantity

2. High price, high quantity

3. Low price, high quantity

4. Low price, low quantity

High price, low quantity

In Plaintown, there are many restaurants that hire waitstaff, lots of people who want to work as waiters, and the restaurants do not expect prospective waiters to have much experience. Which of the following BEST describes the equilibrium point for labor with regard to waiters?

1. High quantity, high price

2. High quantity, low price

3. Low quantity, low price

4. Low quantity, high price

High quantity, low price

labor market

• a market where people offer their skills to employers in exchange for wages, salaries and other forms of compensation

• the number of people willing to work is based upon the level of pay that employers are offering

model

a simplification of reality that we use to try to understand a complex concept 

market clearing

everyone who wants to hire an employee at the current wage rate can do it, and everyone who wants to work at that rate of wage can

monopsony power

where a single employer has the power to control the terms of employment of most, if not all, of its workforce

What happens when a labor market clears?

1. Everyone that wants a job at the current wage rate can get a job and every employer that wants to hire someone at the current wage rate can.

2. There are no more employers left.

3. There are no more potential employees or employers left.

4. There are no more potential employees left.

Everyone that wants a job at the current wage rate can get a job and every employer that wants to hire someone at the current wage rate can.

Which of the following is the BEST explanation of a labor market?

1. A place where people find jobs

2. A job fair

3. A place where employers find workers

4. A market where people offer their labor in exchange for compensation and employers seek to purchase labor in exchange for compensation

A market where people offer their labor in exchange for compensation and employers seek to purchase labor in exchange for compensation

What is the monopsony power of employers in regards to the labor market, and what can be done about it?

1. Employers asserting power to stop a union; employees need to file a lawsuit.

2. A feature of a perfectly competitive market; nothing should be done about it.

3. Employees being forced to work; there's nothing you can do about it.

4. The ability of an employer to dictate terms of employment; employees can try to form a union.

The ability of an employer to dictate terms of employment; employees can try to form a union.

What do employers typically do when wages go down?

1. Increase the wages

2. Fire people

3. Hire more people

4. Outsource labor

Hire more people

If everything else remains the same, what happens to the price of labor if the supply of labor goes down?

1. The price of labor goes up.

2. Nothing.

3. The price of labor creates a monopsony.

4. The price of labor goes down.

The price of labor goes up.

labor union

organization of employees that is created for the purposes of dealing with employers

collective bargaining

the process during which a labor union negotiates on behalf of its members

labor conspiracy theory

collective bargaining would interfere with the market and destroy competition

Clayton Act

in 1914, which declared that human labor was not an article of commerce, and that labor unions were not to be considered a violation of antitrust laws

yellow dog contracts

in which applicants acknowledged that they were not union members and agreed not to become one

The Norris-Laguardia Act

made yellow dog contracts unenforceable as against public policy

National Labor Relations Act (Wagner Act)

in 1935 gave labor unions certain legal rights and powers under federal law

National Labor Relations Board

has the power to investigate employee complaints and issue cease and desist orders against violating companies

Labor Management Relations Act (Taft-Hartley Act)

in 1947, that outlined certain unfair labor acts of unions as a counterweight to the unfair labor acts of employers laid out in the Wagner Act

Federal Meditation and Conciliation Service

provides a means to handle strikes that create a national emergency

closed shop

employee hire only union members and fire any employee who drops his union membership

What's a yellow dog contract?

1. A contract among employers to fight unions.

2. A contract entered into by a union and an employer that outlines the procedure for negotiations.

3. An agreement mediated by an employer and a union with the help of the Federal Mediation and Conciliation Service.

4. An agreement signed by an employment applicant that he is not a member of a union and will not become one.

An agreement signed by an employment applicant that he is not a member of a union and will not become one.

What is collective bargaining?

1. Process where a union bargains with an employer on behalf of its members.

2. A method used by a group of unions to bargain about employment conditions for a number of different employers.

3. Process where a group of companies bargain with each other regarding acceptable wages for employees.

4. A method of bargaining that has been banned by federal law.

Process where a union bargains with an employer on behalf of its members.

How did labor unions arise in the United States?

1. Unions arose out of the Industrial Revolution due to poor working conditions.

2. Various states passed legislation allowing unions.

3. Employers encouraged unions so they could more effectively deal with their employees.

4. Congress passed legislation to allow unions.

Unions arose out of the Industrial Revolution due to poor working conditions.

Which of the following is NOT a federal law specifically governing and regulating labor union relations with employers?

1. The Taft-Hartley Act

2. The Wagner Act

3. The Norris-Laguardia Act

4. The Civil Rights Act

The Civil Rights Act

Jake's business only hires union members and lays off those who drop their membership. Based on this description, would his business be considered a closed shop? Why or why not?

1. No, because it's not clear how many unions operate in the business.

2. Yes because only union members may be hired and those who drop their membership are fired.

3. Yes, because a union operates in the business.

4. No, because there's no clear policy about firing employees who leave the union.

Yes because only union members may be hired and those who drop their membership are fired.

capital

the money necessary to start and expand businesses

Circular Flow Chart

shows how goods and services move through an economy

stock

selling a stake in the ownership of a company

Bonds

pay an interest rate every year, but only pay off the principal, or amount originally invested, once

Crowdfunding

offers some other benefit for investing capital towards a business, often an earlier version of the gadget or product in question

Who provides capital to a company?

1. Households

2. Foreign governments

3. Firms

4. Federal governments

Households

Which of the following describes a stock?

1. A loan-like instrument that pays a certain amount

2. Trading capital for an early product or widget

3. A commodity that bears interest

4. A share of a company's ownership

A share of a company's ownership

Which of the following describes a bond?

1. A loan-like instrument that pays a given percentage

2. A share in ownership of a company

3. An exchange of capital for a widget

4. A commodity that bears interest

A loan-like instrument that pays a given percentage

Why is capital important to firms?

1. It provides a measure of their financial success.

2. It allows them to protect their investments.

3. It provides a measure of their market share.

4. It allows them to expand or start operations.

It allows them to expand or start operations.

Which of the following is an example of crowdfunding?

1. Offering someone a pre-release version of a video game for capital.

2. Offering someone a guaranteed rate of return of 4% for capital.

3. Offering someone use of a car for three hours for capital.

4. Offering someone a 5% share of ownership in a company for capital.

Offering someone a pre-release version of a video game for capital.

Land

the space given to perform a given economic activity

Inelastic in Supply

one day we very well could run out without innovation

Nonrenewable Resources

once they have been completely used, they are gone forever

Renewable Resources

with proper management they can last indefinitely

Natural Resources and Land

• expense with which additional land is created

• the idea of land being rented, not consumed

• natural resources fall under two classes, renewable and nonrenewable

• without proper management, renewable resource can be exhausted

Which of the following would be considered an innovative practice with regard to land use?

1. Moving from online classes to physical classes.

2. Identifying a Superfund site next to a city.

3. Planting the same crop year after year.

4. Building higher buildings with more rental units.

Building higher buildings with more rental units.

People believe that when they purchase a property, they own a piece of land. Is this a valid assertion?

1. Yes, because land must be sold to another person before the title changes hands.

2. Yes, because land is a nonrenewable resource that is extremely valuable.

3. No, because it is impossible to buy land from the earth's crust down to the core.

4. No, because the use of the land is controlled by local government

No, because the use of the land is controlled by local government

What activity would destroy an area of land for human use into the foreseeable future?

1. The building of a parking garage over green space.

2. Creating irrigation ditches and terracing a hill.

3. Draining a wetland to turn it into a nature sanctuary.

4. Radioactive waste being transported to a landfill.

Radioactive waste being transported to a landfill.

Which of the following is an example of a nonrenewable resource?

1. Oxygen

2. Wood

3. Natural gas

4. Water

Natural gas

How can a renewable resource be destroyed?

1. Planning for future use.

2. Lack of economic activity.

3. Leaving the resource alone.

4. Mismanagement.

Mismanagement.