3.8.W - Test Review: Price, Profit, Work & Money

What are activities designed to create innovative new products or improve existing products?

research and development

According to Hazlitt, which of the following are ways that labor unions have worked against productivity? (choose all that apply)

They've insisted on the same hourly wage for all their members regardless of differences in productivity.

They've insisted on hiring additional workers who aren't needed at all.

They've opposed the introduction or improvement of machinery.

They've insisted on rigid subdivisions of labor.

They've insisted on promotion based on seniority instead of merit.

In March 2019, Mike Trout signed a 12-year, $430 million contract to play baseball. Which of the following are reasons that top baseball players like Trout are paid so highly? (choose all that apply)

There are few individuals who are talented enough to become a top baseball player. There is high demand for top baseball players.

Which of the following would increase the market value of engineers? (choose all that apply)

An increase in demand for engineers. A decrease in the supply of engineers.

In a market economy, what determines the market value of labor?

supply and demand

The average annual income for lawyers in 2018 was $144,230, well above the national average. Which of the following are possible reasons their income was so high? (choose all that apply)

A limited number of individuals are talented enough to become lawyers. Becoming a lawyer requires many years of expensive education and training.

Which of the following are tactics used by labor unions to force businesses to accept their demands? (choose all that apply)

strikes, boycotts, picketing

Hazlitt argues that "the power of labor unions to raise wages over the long run and for the whole working population ________________."

has been greatly exaggerated

When someone improves their skills through education or experience, it's known as a(n) ___________ in human capital.

investment

Hazlitt argues that "emotional economics has given birth to theories that calm examination cannot justify." Which of the following are theories that have resulted from emotional economics? (choose all that apply)

All the nation's workers have identical interests. Labor is underpaid generally.

Which of the following is the only economic reason for a company to pay its workers higher wages?

because they expect that investment to yield higher productivity

According to Hazlitt, Marxists and purchasing-power schools argue that the only wages that will prevent an imminent economic crash are wages that enable workers to _________________.

buy back the product they create

According to Hazlitt, what is the most likely result of the price of labor being forced above or below its equilibrium level?

a reduction in the volume of employment and production

In an exchange economy, everybody's income is somebody else's _______.

cost

Which of the following are characteristics of money? (choose all that apply)

acceptability, divisibility

Money that has value in itself is called ____________.

commodity money

What did the local Indians use for currency when the English settled in North America in the 1600s?

wampum

What is the characteristic of money that states it must maintain the same shape, size, and value?

uniformity

This type of financial institution is used by most Americans and includes large companies such as Wells Fargo and Bank of America.

commercial bank

If you deposit $100 into a savings account, about how much of that deposit does the bank have to keep in reserve?

$10.00

This type of financial institution is responsible for managing all the other financial institutions in its nation.

central bank

This type of financial institution restricts membership to a certain set of customers, such as military families.

credit union

Which recent president argued that Henry Ford increased his workers' wages so that they'd be able to buy the cars that they produced?

Barack Obama

According to Hazlitt, a universal increase in wages might give workers a larger slice of a smaller economic pie, but it's very unlikely that this slice would be greater in _________ size.

absolute

Artificial increases in workers' wages created by minimum wage laws or labor union bargaining might help workers in the short term, but what will likely be the long-term effect of raising workers' wages above their market value?

The overall economy will be damaged, and workers will eventually be no better off (and possibly worse off) than they were before the artificial increase.

Gold and silver coins were once commonly used as money around the world. What type of money are gold and silver coins?

commodity money

Which of the following is the correct definition for money?

anything widely accepted as final payment for goods and services

Some financial institutions collect premiums from their customers and then pay those customers back whenever the customers file a claim after suffering some kind of loss, such as their home burning down. This service is called _________.

insurance

Many financial institutions help their clients plan for big events like retirement or purchasing a home. This service is called __________.

financial advising

Customers can use a ___________ to have a bank make purchases for them. Then the customers pay the bank for those purchases (usually with interest).

credit card

Which of the following would cause a negative change in supply for corn? (choose all that apply)

a decrease in the number of corn sellers, an increase in the cost of tractors used in corn fields, an expectation among producers that corn won't be very profitable in the near future

Which of the following would result in a change in supply? (choose all that apply)

a change in the expectations of producers, a change in the technology used to produce the good or service

A shift in the supply curve caused by a change in the determinants of supply is called _______.

change in supply

What is the graphical representation of a supply schedule called?

supply curve

Law of Supply

producers will make more of a product if the price rises and less of that product if the price drops

If the price of milk increases, then what will happen to demand for milk, if all other things remain the same?

Demand will decrease.

If demand for pancakes increases when the price of waffles increases, that means the two goods are _________.

substitutes

Which of the following would result in a negative change in demand for bus tickets? (choose all that apply)

a decrease in the cost of new cars, a decrease in the number of consumers, an increase in consumers' incomes

If demand for potato chips decreases when the price of salsa increases, that means the two goods are ________.

complements

Which of the following would result in a positive change in demand for pizza? (choose all that apply)

an increase in the number of consumers, an increase in the price of burgers

If the market price for Super Bowl tickets is $2,000, and the equilibrium price is $3,000, there will be a(n) ________ of Super Bowl tickets.

shortage

From left to right, supply curve always slope ____________ while demand curves slope____________ .

upward, downward

Illegal goods such as fake handbags or illegal drugs are sold on the _________ market.

black

If there is a positive change in supply, which of the following will happen? (choose all that apply)

The equilibrium price will decrease, the supply curve will shift to the right

If there is a negative change in demand, what will happen to the equilibrium price?

It will decrease.

Which of the following is true about the supply-and-demand price system? (choose all that apply)

It drives the least efficient producers out of business. It solves the problem of alternative applications of labor and capital.

Which of the following components affect whether the supply of a good is price elastic or inelastic? (choose all that apply)

availability of raw materials for production, available production capacity, time period required to produce more of the product

According to Economics in One Lesson, "In an economy in equilibrium, a given industry can expand only ___________."

at the expense of other industries

Which of the following would be most likely to have a price inelastic demand?

electricity

elasticity

how buyers and sellers respond to price changes

In a competitive market economy, who is driven out of business by a fall in price?

inefficient producers

If the equilibrium price of corn is $4.00, but the government establishes a minimum market price of $5.00, what will happen?

There will be a surplus of corn.

Rent control is an example of a price __________.

ceiling

According to Economics in One Lesson, one method the government used to raise crop prices was to give "_____________ to farmers to enable them to hold their crops off the market."

government loans

According to Economics in One Lesson, people who advocate establishing a price floor argue that they’re not trying to boost the price but are only trying to _________ it.

stabilize

According to Hazlitt, "Real wages come out of _________, not out of government decrees."

production

Which of the following are controls used to try to offset the negative effects of setting a maximum price? (choose all that apply)

universal price-fixing, rationing, subsidies, cost-control

During World War II, the American government established a rationing system to counteract the shortages caused by fixing maximum prices. Why is rationing only partly effective in counteracting these shortages?

It only limits the demand without also stimulating the supply.

Hazlitt argues that the best way to raise wages is to raise labor productivity. Which of the following are methods for accomplishing this? (choose all that apply)

better education and training, new inventions and improvements, and more efficient management on the part of employers

According to Economics in One Lesson, minimum wage laws are a(n) ________ weapon for combating low wages.

limited

What is an incentive for savers that banks have some control over?

high interest rate

What is a dividend?

a distribution of profits to investors

What is a capital gain?

profit made from the sale of an investment such as stock or real estate

One of the biggest incentives for consumers is a low ______.

price

An activist who attempts to persuade politicians to vote for legislation that benefits their group is a _________.

lobbyist

Utility is _____________.

inherently unmeasurable

A restriction on total spending is called a _________ constraint.

budget

Consumer preferences are commonly impacted by new technology, as well as by health and __________ concerns.

environmental

Consumers can discourage production of a particular product by casting their ______ votes elsewhere.

dollar

Define utility:

when consumers buy the goods or services that bring them the most satisfaction

If there is no profit in making a product, it's a sign of what?

The labor and capital devoted to its production are misdirected.

How much of the total national income of the United States is made up of corporate profits?

6.6%

According to Hazlitt, which of the following are functions of profit? (choose all that apply)

to guide and channel the factors of production and to put constant pressures on businesses to become more efficient

If a lemonade stand generates $100 in total revenue with $50 in total cost, what is its profit?

$50

If a video game generates $10,000 in profit on total revenue of $30,000, what was the game's total cost?

$20,000

Why might a soda company lower their prices when production costs fall? (choose all that apply)

The company hopes more consumers will buy their product at the lower price. Because production costs are lower, the company can earn the same profit per unit even if they sell their products for less. Other soda companies have lowered their prices and are stealing away customers.

What two choices does a company have when production costs rise? (choose all that apply)

The company can accept lower profits OR increase their prices.

What are the two reasons why the value of a nation's gross domestic product might increase from one year to the next? (choose all that apply)

The country OR inflation has increased the quantity of goods and services produced.

Real GDP adjusts gross domestic product for ________.

inflation

As an individual, you are most productive when _____________.

you reach a particular goal with minimum effort or cost

If a nation has a GDP of $1,000,000 and a population of 1,000, what is its per capita GDP?

$1,000

Increased productivity helps businesses make greater profits, but it also helps consumers by __________________.

giving them access to cheaper goods and services

__________ is a great way to not only help those in need but also gain valuable experience and increase your human capital.

volunteering

Private individuals who develop new products and technologies can protect their invention by filing for a(n) ______.

patent

Physical capital is another name for _____________.

capital resources

Define productivity

how efficiently resources are used for goods and services

Spread-the-work schemes and the fear of machines both stem from the same fallacy that a more efficient way of doings things destroys _______.

jobs

What percentage of American jobs are currently at risk of being automated in the next 15 years?

30 to 40 percent

According to Hazlitt, which of these are the real results of machines? (choose all that apply)

increasing economic welfare and production

Spread-the-work schemes are partially based on the fallacy that there is a(n) _______ amount of work to be done in the world.

fixed

What would happen if a clothing manufacturer discovered a machine that would allow him to make overcoats for half as much labor as before? (choose all that apply)

The manufacturer's competition adopts the new technology, which forces down the price of overcoats. The manufacturer's profits increase, and he ends up giving indirectly as many jobs as he ceased to give directly. The manufacturer installs the new machines and reduces his labor force by half.

Who said, "We sometimes learn a lot from our failures if we have put into the effort the best thought and work we are capable of"?

Thomas Edison

Which of the following are important ways to prepare for the unpredictable future of work? (choose all that apply)

Say yes to opportunities and be willing to challenge your assumptions about yourself. Learn how to learn and be flexible and adaptable.

What aspects of the modern economy have made business more competitive? (choose all that apply)

cheaper transportation and e-commerce

Which of the following are results of competition between consumers? (choose all that apply)

goods are allocated to those willing to pay the most

Which of the following are results of competition between producers? (choose all that apply)

more choices and improved quality

Which of the following is true about branding in the model of perfect competition?

There can't be any brands.

explain what happens if a market is difficult to enter or exit

less producers will enter the market, so the producers who are already in the market get more power over the prices

One characteristic of perfect competition is that all products are _______.

identical

In the model of perfect competition, all buyers must know ___________.

the prices every seller is charging for their products