What is economics? correct answers A study of how people make choices to achieve goals with resource constraints.
What is meant by "the invisible hand?" correct answers The "invisible hand" means that the division of labor and exchange occur naturally among people without being directed by anyon...
ECON 100 || QUESTIONS AND ANSWERS 100%
CORRECT!!
What is economics? correct answers A study of how people make choices to achieve goals
with resource constraints.
What is meant by "the invisible hand?" correct answers The "invisible hand" means that the
division of labor and exchange occur naturally among people without being directed by
anyone.
What is the root of exchange behavior? correct answers Human natural tendency toward
division of labor to gain efficiency.
Division of labor and exchange are human tendencies to enhance one's self-interest. Can
contributing to charities to assure everyone in one's community has access to food, housing
and health care be consistent with the principles of self-interest? correct answers Yes
What is scientific about Social Science? correct answers Social scientists use the scientific
method to test hypotheses about human behavior.
What is the contribution of The Wealth of Nations published by Adam Smith in 1776?
correct answers Adam Smith described how people made production and consumption
decisions in the 18th Century.
What is a market as discussed in an economics class? correct answers The coming together of
suppliers and demanders of goods and services.
What do consumers want to achieve? correct answers - Maximize personal satisfaction.
- Take care of their children and families.
- Assure that poor people are fed, housed, and clothed.
**All the above**
As the price of gasoline continues to rise, correct answers The quantity consumed will
decline as consumers respond to higher prices.
Why would producers offer more of a product as price rises? correct answers - Because some
inefficient, high-cost producers can enter the market at high prices.
- Because producers can justify using more expensive inputs when product prices are high.
- Because producers are willing to work overtime when prices are good.
**All the above**
What is the principal communication device between producers and consumers in a free
market? correct answers Price.
From an economic perspective, a choice is: correct answers A decision that must be made
because resources are scarce.
, You know you have incurred a cost when: correct answers You must give up something you
wanted when making a choice.
Why do we tend to see specialization and trade develop at the same time? correct answers
Specialization increases productivity, so trade must increase because no one remains self-
sufficient.
In a free market, competition involves: correct answers Buyer competing against buyer, and
seller competing against seller.
Automobile sales have plummeted during the recession. This suggests that consumer demand
for automobiles tends to be: correct answers Income Elastic
Why are states rushing to increase cigarette taxes? correct answers Because cigarettes have a
demand which is price inelastic, resulting in big increases in state revenue.
In the German Beer Market, What Effect Do Wine Sales Have on Beer Demand? correct
answers -Wine and Beer Go Together (Complements) So More Wine Causes an Increase in
Demand for Beer.
-Wine and Beer are Substitutes So More Wine Causes a Decrease in Demand for Beer.
-Wine and Beer have no Effect on One Another, So the Demand for Beer is Unaffected by
the Consumption of Wine.
How does a "black market" get established? correct answers When producers are willing to
offer, and consumers are willing to buy a product or service which is banned by a
governmental authority.
Which of the following products is likely to have the lowest income elasticity of demand?
correct answers - Vacation trips to Las Vegas.
- Diamond rings.
- Refrigerators.
*Milk*
Automobile sales have plummeted during the recession. This suggests that consumer demand
for automobiles tends to be: correct answers Income elastic.
How would you characterize the price elasticity of demand for college education? correct
answers Price inelastic because if one wants education, they get it at almost any price as an
investment in their future income.
Why are prices at a fruit and vegetable farmers' market volatile within the same day? correct
answers Producers (sellers) adjust price during the day to get customers to buyout exactly the
supply they brought with them to the market.
What happens between buyers and sellers when there is a surplus of a product on the market?
correct answers Sellers put the product on sale at lower prices and customers respond by
buying more quantity on sale than they were before the sale.
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