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Economics Midterm
| Question | Answer |
|---|---|
| The basic economic challenge faced by societies is there are not enough resources to satisfy our wants. This is known as _______. | scarcity |
| Due to limited resources, households, businesses, and the government are forced to make choices. What is given up when a choice is made is known as the _______. | opportunity cost |
| Identify the factors of production in the making the car (N) _______ (C) _______ (L) _______ | metal, leather tools assumably line worker |
| In the circular flow, what do households provide _______ receive _______ | resources, income |
| In the circular flow, what do businesses provide _______ receive ______ | private goods and services, profit |
| In the circular flow, what does the government receive _______ provide _______ | taxes, public goods and services |
| A _______ is a want, whereas a _______ is a need | Steak, Food |
| A _______ is a good, whereas _______ is a service | Car, Haircut |
| A _______ is a durable good, whereas a _______is a non-durable good | House, Shirt |
| In a mixed economy, economic decisions are made by _______ | households, business, government |
| In a command economy, economic decisions are made by _______ | Government |
| What are the characteristics of a market economy _______, _______, _______ | free Enterprise, competition, choice |
| What are the characteristics of a command economy _______, _______, _______ | no competition, no profit, no choices |
| The economic philosopher who had a major influence on the market economies of the 19th century was _______. One of his philosophies was known as laissez faire which means _______ | no government intervention in economic affairs |
| The governments role in a mixed economy is _______ and _______ | protector, provider |
| The closest place to a market economy is _______, whereas the closest thing to communism (command economy) was _______ | Honk Kong, Soviet Union |
| In Japan, the government controls competition between businesses, the result is _______ | Higher the cost of living |
| The economic philosopher who influenced the development of a command economy in communist countries was _______ | Karl Marx |
| The driving force in a market economy are people who are willing to take risks in order to make a profit, these are _______ | entrepreneurs |
| An example of a former command economy that is converting to a market economy _______, _______ | China, Soviet Union |
| One of the challenges of facing countries converting to capitalism is converting government owned businesses to privately owned businesses. This is known as _______ | privatization |
| Explain each of the economic goals | freedom- choices efficiency- not wasting equity- equal / fair security- help during hardship full employment- work price stability- prevent inflation growth increase # of goods and services future goals- protect environment for future generations |
| Which are the reasons the government intervenes in the economy? | inadequate competitions, correcting externalities, inadequate info, resource immobility, provide public goods |
| The Food and Drug Administration (FDA) and the Federal Aviation Administration (FAA) are examples of _______ | Government Regulatory Agencies |
| The government requires businesses to reveal information about their products so consumers can make informed buying decisions. This is knows as _______ | public disclosure |
| Which was a law passed to prevent monopolies? | Antitrust Legislation |
| Anti-trust laws that prevent monopolies are designed to insure there is _______ | adequate competition |
| The government needs to provide certain goods and services that are collectively consumed because _______ | businesses produce only what they make |
| An example of a public good is _______ | School |
| A consumers desire, ability and willingness to buy a product at a given prince is known as _______ | Demand |
| A producers desire, ability and willingness to produce a product at a given prince is known as _______ | Supply |
| Things besides price that determine demand for a good or service are known as _______ | non-price determinants |
| Explain how the price of an original good can change the demand for the complimentary good _____________________ | if the price of the original goes down (up) demand for the comp goes up (down) |
| Give an example of an item with elastic _______ and inelastic demand are _______ | ribeye, gas |
| cost of inputs | N C L cost up down supply down up |
| productivity | efficient produce up down supply up down |
| techonology | new machines lower cost: increase supply |
| number of sellers | suppliers up down supply up down |
| taxes | increase/decrease, costs up down supply down up |
| subsidies | government pay to help business cost down supply up (take away supply down) |
| government regulation | laws about production costs up supply down (take away supply up) |
| Goods that producers can not quickly increase their supply because they require a low of capital and skilled labor have _______ | increased supply inelastic supply |
| in a competitive market place price is determined by _______ | supply and demand |
| The most common business structure is the _______ | sole proprietorships |
| The business structure that generates the most sales in the U.S. economy is the _______ | corporations |
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