Econ Final Multiple Choice

The idea that consumers rule the market

Consumer sovereignty

What are the four factors of production?

Land, Labor, Capital, Entrepreneurship

This economy is a combination of Market principles and some government intervention to maintain equity

Mixed economy

The production in this kind of economy is guaranteed by birthright, and passed through multiple generations.

Traditional economy

In this economic style, there is generally   a low standard of living, no record keeping, and no taxes. *

Traditional economy

Opportunity cost can be defined as the cost of?

The next best alternative

In order to make wise economic decisions, we must weigh the __________  and ____________ ?

Costs, benefits

The quality of our life based on necessities (needs) and luxuries (wants).

Standard of living

Any country can produce as much of any product they choose.

False

Economic growth is created when production is increased using the same amount of resources.

True

The right and privilege to control one's own possessions

Private property rights

This economic and social goal desires an overall increase in production over time

Economic growth

The driving force that encourages people and organizations to try to improve their material well being.

Profit motive

A system in which the factors of production are owned by private citizens.

Capitalism

An economic system in which a central authority makes economic decisions.

Command economy

The situation in which the money an individual receives does not increase even though prices go up. 

Fixed income

The act of buyers and sellers freely conducting business in a market

Voluntary exchange

 An economic system in which ritual, habit and custom dictate most economic and social behavior.

Traditional economy

A rise in the general level of prices

Inflation

This economic and social goal requires that resources are not wasted, so benefits gained are greater than costs incurred.

Economic efficiency

This economic and social goal hopes for people to to choose their own occupations, employers, and uses for their money.

Economic freedom

These people are the driving force behind the economy, accepting great risk for the possibility of great reward.

Entrepreneurs

Sellers struggling to attract consumers while still lowering costs and increasing production. 

Competition

This group is the second largest consuming unit in the U.S. economy and serves as both consumer and provider of goods and services.

The government

The basic economic question we must all ask ourselves.

How do I satisfy unlimited wants with limited resources?

Wealth is determined by goods and services that are accumulated.

False

This is the feature that makes a product or service usable.

Utility

These goods should be usable and have utility for a minimum of 3 years. 

Durable goods

These are goods that have immediate utility when purchased.

Consumer goods

These are goods that are purchased by companies to make other goods that will be sold to individual consumers.

Capital goods

Laborers focusing on one step of production or manufacturing.

Specialization

The three basic economic questions that every business or government must answer before beginning production.

What are we going to produce? How are we going to produce it? Who are we producing the product for? 

The idea that resources and capital are limited.

Scarcity

The government has a direct role in the economy by purchasing and providing goods and services to maintain social equity.

True

The government has an indirect role in the economy by regulating certain industries that have little competition.

True

Revenue and profits are the same thing

False

The desire, ability, and willingness to buy a product

Demand

A rise in the general level of prices

Inflation

Sellers are struggling to attract consumers while still lowering costs and increasing production

Competition

This group is the second largest consuming unit in the US economy and serves as both consumer and provider of goods and services

The government

A listing of all possible price points with demand at each price for a particular product

Demand schedule

The quantity demanded of a good or service varies inversely with its price

Law of demand

The extra satisfaction we get from using additional quantities of the product begins to diminish

Diminished marginal utility

The change in quantity demanded because of a change in price that alters consumers real income

Income effect

A change in quantity demanded because of a change in the relative price of the product

Substitution effect

Consumer income can cause the demand curve to shift left or right

True

Consumer taste or preference can cause a shift in the demand curve

True

A rise in the price of butter leading to increased demand for margarine is an example of

Substitutes

A rise in population can cause the market demand curve to shift to the right

True

The cost of running a business, even when nothing is being produced

Fixed cost

The cost of producing one more unit

Marginal cost

The sum of fixed cost and variable cost

Total cost

A producer looks for maximum profit at the point where

Marginal cost = marginal revenue

The market equilibrium point is where

The supply and demand curves intersect 

In perfect competition, prices are determined by

Supply and demand

The maximum amount that the government sets for landlords to charge for housing

Price ceiling

The minimum wage

Price floor

A market structure where supply and demand are completely meaningless

Monopoly

Product differentiation is the main key in this market structure

Monopolistic competition

A market structure where a very few large producers dominate the industry

Oligopoly

A market structure with only one seller of a particular product

Monopoly

The belief that the government should stay out of the economy and let natural commerce and trade exist

Laissez faire

When several large producers agree to set prices or cooperate in price fixing

Collusion

Unintended side effects in the economy that can benefit or harm a third party

Externalities

A monopoly based on the absence of sellers in a certain area

Geographic monopoly

A monopoly based on control or ownership of a manufacturing method, process, or other scientific advancement

Technological monopoly

Monopolies that involve products and services that private industry cannot adequately provide

Government monopoly

In 1890 the government passed this first piece of legislation to protect trade and commerce against unlawful restraint and monopoly

The Sherman Antitrust act

Products that are collectively consumed by everyone, and whose use by one individual does not diminish the satisfaction or value available to others

Public goods

The amount of revenue required for the break even point

Fixed costs are covered

Those who benefit from government goods and services should pay in proportion to the amount of benefits they receive

Benefit principle of taxation

A listing of all possible price points and demand at each price for a particular product

Demand schedule

Refer to graph 1, if a quantity of 200 are supplied at a price of $0.50 it would create

A shortage of 90

Refer to graph 1, if a quantity of 200 are supplied at a price of $1.50

A surplus of 70

Refer to graph 2, Coca-Cola experiences a significant increase in the cost of aluminum used to make pop cans. What will happen to the market for Coca-Cola

D, bottom right

Refer to graph 2, scientists determine that eating an apple a day will add 10 years to your life. The market for apples will

A, top left

Refer to graph 2, government regulators place a destructive pollution level output amount on the steel industry. The market for steel will

D, bottom right

Refer to graph 2, new mining technology allows faster and more efficient gold mining. The market for gold will

C, bottom left

Refer to graph 2, the only large employer in a small city is forced to lay off 5000 employees. Luxary goods will

B, Top right

Refer to graph 3, the product is represented by the red line is

Perfectly elastic

Refer to graph 4, the product represented by the yellow line is

Perfectly inelastic

Those who benefit from government goods and services should pay in proportion to the amount of benefits they receive.

Benefit principle of taxation

Broad social programs that use established eligibility requirements to provide, health, nutritional, or income supplements to individuals.

Entitlements

A moneyless economy that relies on trade.

Barter economy

What percentage of the civilian labor force is currently employed?

Less than 50%

The first instance of organized labor in the United States occurs when?

During the Colonial Period (1770s)

When employers refuse to let employees work during contentious contract negotiations.

Lockout

All labor unions belong to the AFL-CIO.

False

The difference between arbitration and mediation is that arbitration is a binding agreement.

True

If labor and management are unable to resolve a contract dispute, the President of the United States can get involved.

True

The idea that employers value employees with degrees and diplomas.

Signaling theory

The minimum wage is determined through?

Government intervention

Government contracts which are reserved for certain, targeted groups.

Set aside contracts

Money that has an alternative use as an economic good or commodity.

Commodity money

Which of the following is not a characteristic of money?

Adaptability

Fiat currency that must be accepted in payment for debts.

Legal tender

In 1862 the Union printed $150 million in United States notes, also known as

Greenbacks

Paper currency issued by the Treasury that was redeemable in silver and gold.

Treasury coin notes

The Federal Reserve System was created in?

1913

A bank that can lend money to other banks in time of need.

Central bank