Questions:
Question 1.1The general concern of economics is with the study of the degree of competition in stock and bond markets in the economy.
efficient use of limited productive resources to satisfy economic wants.
issue of equality in the distribution of income and wealth among households.
budget deficits in the domestic economy and trade deficits in the international economy.
Question 2.2The basic economic problem is essentially one of deciding how to make the best use of imited resources to satisfy limited economic wants.
limited resources to satisfy unlimited economic wants.
unlimited resources to satisfy unlimited economic wants.
unlimited resources to satisfy limited economic wants.
Question 3.3Are the goods that businesses offer for "free" to consumers also free to society?
Yes, because the individual consumer does not have to pay for them.
Yes, because the marginal benefit is greater than the marginal cost.
No, because scarce resources were used to produce the free goods.
No, because society does not assign a value to free goods.
Question 4.4Which is not considered to be an economic resource?
Land (or natural resources)
Money
Labor
Tools and machinery
Question 5.5A movement along the production possibilities curve would imply that the labor force has grown.
productivity has increased.
productivity has declined.
society has chosen a different set of outputs.
Question 6.6Which would not be characteristic of a capitalist economy?
Government ownership of the factors of production
Competition and unrestricted markets
Reliance on the market system
Free enterprise and choice
Question 7.7The development of CDs and DVDs that significantly reduced the market for cassette tapes would be an example of specialization.
derived demand.
roundabout production.
creative destruction.
Question 8.8The circular flow model
assumes that central planning is taking place.
illustrates how natural resources are created.
illustrates how money is created by the banking system.
illustrates the interdependence of businesses and consumers.
Question 9.9In a market system, well-defined property rights are important because they
reduce unnecessary investment.
limit destructive economic growth.
create economic problems.
encourage economic activity.
Question 10.10Which is the main problem with the barter system of exchange? Barter
encourages self-interest and selfishness.
fosters specialization and division of labor.
requires a coincidence of wants.
undermines the right to bequeath.
Question 11.11Josephine makes $100 a day as a flower shop attendant. She takes off two days of work without pay to travel to another city to attend her sister's wedding. The cost of transportation for the trip is $180 round trip. The cost of her hotel stay is $99 per night and she stays for 2 nights. What is the opportunity cost of Josephine's trip to the wedding? Show your calculations.
Question 12.12Identify some intrinsic qualities of capitalist and command economic systems. Identify two countries that practice each.