Econ 2020 Chapter 1 and 2 Questions

Scarcity means that

wants are greater than what we can produce with our resources.

Which of the following is a topic studied in macroeconomics?

the pricing decisions in the computer hardware industry

the effect on economic growth if the government raises taxes

how the wheat industry determines how much wheat to grow

 the impact of higher prices for gasoline on the number of SUVs people buy

The effect on economic growth if the government raises taxes

What is NOT true about rational choice?

It involves comparing costs and benefits.

It might turn out not to have been the best choice after the event.

It is a choice that uses the available resources to best achieve the objective of the person making the choice.

It is the same for all individuals.

It is the same for all individuals.

You have chosen to take a trip during spring break. If you had not gone, you would either have worked at a temporary job or studied for exams. The opportunity cost of your trip is:

We cannot determine what the opportunity cost is without knowing which alternative, working or studying you would have preferred.

The difference between consumption and capital goods is that

capital goods are used to produce additional goods while consumption goods are not.

What are the categories of factors of production

land, labor, capital, and entrepreneurship

the concept of human captial describes

human skills, that is, the quality of labor

Payments to the factors of production are

rent, wages, interest, and profit or loss.

The functional distribution of income measures what?

the distribution of earnings by the factors of production

When the total U.S. production of goods and services is divided into consumption goods and services, capital goods, government goods and services, and export goods and services, the largest component is

Consumption of goods and services

______ the owners of the factors of production, while ______ what amounts of those factors to hire.

Households are; firms determine

A circular flow model shows the

flow of expenditure and incomes are arise from the households’, firms’ and governments’ decisions

An example of a real flow in the circular flow diagram is

a household’s supply of work effort at its new business.

In the factor market, firms ____ and households_____

pay rent, wages, interest, and profit; earn rent, wages, interest, and profit.

____ choose(s) the quantities of goods and services to produce, while ____ choose(s) the quantities of goods and services to buy

Firms; households and the government

____ choose the quantities of factors of production to hire and ___ choose the quantities of goods and services to produce.

Firms; Firms

Scarcity requires that we

make choices about what goods and services to produce

Which of the following BEST described macroeconomics?

It analyzes the aggregate effects on the national economy of the choices made by individuals, firms, and governments.

It studies the choices that individuals and businesses make when coping with scarcity.

 It examines how the choices that individuals affect governments.

 It is not a social science because its predictions cannot be tested.

It analyzes the aggregate effects on the national economy of the choices made by individuals, firms, and governments

A rational choice is one that

uses the available resources to most effectively satisfy the wants of the person making the choice.

If Jessie studies economics for two hours instead of going to the movies with her friends, then

the opportunity cost of studying is the missed movie

Capital is a factor of production. Which of the following is an example of capital?

i. $1,000 in money    

ii. 100 shares of Microsoft stock

iii.  $10,000 in bonds issued by General Motors

iv. a drill press in your local machine shop

iv. Only

Goods and services are produced by using four factors of production_______;

______ paid for the use of land; _______paid for the services of labor; and _____ paid for the use of capital.

land, labor, capital, and entrepreneurship; rent is; wages are; interest is

The personal distribution of income measures which of the following?

the distribution of income among households

Dan missed class the day the professor covered the circular flow model. Dan asked his friend Joan to explain markets to him. Joan correctly stated that a marker

is any arrangement that brings buyers and sellers together.

In the goods market, firms ________ and households ________; in the factor market, firms ________ and households ________.

supply goods and services; purchase goods and services; pay rent, wages, interest, and profit; earn rent, wages, interest, and profit

In the circular flow model, rent, wages, interest, and profit paid flow from ________ through ________ to ________; households receive transfers from ________, and firms receive transfers from ________..

firms; farctors markets; households; government; government