ECON 1113 The Economics of Social Issues (S) Oklahoma State University Main Campus to all human beings regardless of environment which of the following is often referred to as the basic postulate of economics? incentives matter-- individuals respond in predictable ways to change in personal costs and benefits the expression, "there's no such thing as a free lunch," implies that... opportunity costs are incurred when resources are used to produce good and services Maria wishes to buy gasoline and have her car washed. She finds that if she buys 9 gallons of gasoline at $2.50 per gallon, the car wash costs $2, but if she buys 10 gallons of gasoline, the car wash is free. For Maria, the marginal cost of the tenth gallon of gasoline is if the market price of a good is more than the opportunity cost of producing it, producers will increase supply in the long run who gains in a voluntary trade? both the buyer and the seller reflects that people are achieving higher income levels and living standards voluntary trade promotes economic progress because it... makes larger outputs possible as a result of specialization high transaction costs will tend to reduce the number of mutually beneficial exchanges reduce transactions costs if the internet helps buyers learn about the availability of products and find potential sellers more quickly, the gains from trade will increase the curve that shows the relationship between the price of a good and the quantity that consumers are willing to purchase at each price if equilibrium is present in a market, quantity demanded equals quantity supplied when individuals increase their personal wealth through production and exchange, they... increase the wealth of others the pursuit of profit will - encourage firms to produce efficiently and keep their costs low - " goods and services that consumers value highly relative to costs - discover and develop better products and lower-cost production methods economic progress comes primarily through entrepreneurial action directed by competitive markets if you want to earn a high income you should figure out what others value because... others will be willing to pay you for what they value losses and business failures will help redirect resources away from unproductive projects the law of comparative advantage specialization in goods and services one can produce at a low cost makes it possible for trading partners to produce a larger joint output the income and living standards of a nation will increase when the availability of goods and services that people value increases when the government funds a project that will create jobs, the funds for the project... will have to be either taxed or borrowed from the private sector adam smith's invisible hand principle stresses the tendency of... the competitive market process to direct self-interested individuals into activities that enhance the economic welfare of society which of the following is a predictable, secondary effect of a sharp increase in gasoline prices? producers will increase the production of fuel-efficient cars in a free market economy, consumption and investment decisions shape the future course of the national economy why is private ownership an important source of economic prosperity it provides owners with a strong incentive to develop and use assets in ways that others value highly yes, the farmer will benefit from increased valuation of the land as the trees grow and the harvest moves closer under a system of private property, could a 60-year-old owner of a tree farm benefit by planting and caring for a crop of douglas firs, most of which will not be ready to harvest for fifty years? which of the following is most important if a country is going to achieve and sustain rapid economic growth? an open and competitive capital market even-handed enforcement of contracts fuels economic prosperity because it... promotes gains from trade by minimizing the costs of entry and enforcement of contracts competition is present when freedom of entry and rival firms are present in a market what role do losses play in a competitive market? they send a message that more value would be created if the resources were used to produce other goods which of the following best summarizes the importance of business failure and the central idea of "creative destruction in a market economy?" business failure allows the assets and resources from that business to move into other areas where they will be more productive if a nation is going to achieve and sustain a high rate of economic growth, it must have a mechanism capable of attracting savings and channeling them into wealth-creating projects "walmart is a low wage firm and this indicates that it exploits its workers" which of the following should cause one to question the validity of this no one is required to work for walmart and, therefore, it must attract workers by paying them more attractive wages then they could earn elsewhere
in recent decades labor markets in european countries like italy and spain have been more highly regulated and the unemployment rates of the european countries have been higher than the United States if the government levies $20 billion in taxes to finance additional spending on military weapons, the net impact on total employment will be small because the higher taxes will reduce spending in the private sector, which will tend to offset any jobs created by the government spending private entrepreneurs are likely to make better investment decisions than central planners because investors who make mistakes must bear the costs of these mistakes personally which of the following contributed to the soaring housing prices of 2002-2005? regulations designed to make housing more affordable increased the demand for housing and drove housing prices upward. which of the following is true of regulation? regulatory agencies often ignore the secondary effects of their actions and fail to foresee future problems a persistent increase in the general level of prices whatever is generally used to pay for goods, services and resources monetary and price instability will generate uncertainty, and encourage investors and businesses to move their activities to countries with a more stable monetary environment which of the following will discourage investment high and variable rates of inflation the fed's low short-term interest rate policy of 2002 to 2004 encouraged decision makers to borrow more and increase their purchases of housing which of the following is true of taxes? taxes drive a wedge between what buyers pay and what sellers receive why do foreigners export goods and services to buyers in the united states? they want to acquire dollars so they can purchase things from americans trade restrictions like tariffs and quotas will reduce the value of goods and services that we will be able to produce and consume which of the following resulted from the smoot-hawley trade bill of 1930? many countries responded by imposing higher tariffs on American products, and the volume of international trade fell sharply in order to achieve a high economic freedom rating, a country must protect property rights, enforce contracts even-handedly, and rely extensively on markets to allocate goods and services which of the following would be included in US GDP? the value of the spark plugs tim buys in order to do a tune-up on his car in new york the value of all final goods and services produced in an economy during a year which of the following is included in US GDP? the production of tires by goodyear in Ohio that are purchased by you one reason why GDP may not be an accurate measure of the quality of life is because... if people decide to consume more leisure, GDP will decline which of the following would be considered an intermediate good the buttons used of a pair of levi button-down blue jeans which of the following would NOT be considered a part of government purchases? government payments to elderly individuals through the medicare program personal consumption expenditures would include all of the following except: a household's purchase of a new home which of the following would be included as gross private domestic investment a new factory built by a firm suppose that during 2006 a nation's net private domestic investment was $3.5 billion. This would imply that: after accounting for depreciation, the nation's capital stock grew by $3.5 billion during the year the consumption of fixed capital refers to: the allowance made for depreciation of an accidental damage to the nation's capital stock suppose gross domestic investment is $625 billion. The consumption of fixed capital is $600 billion. Net Investment is: suppose federal government purchases of goods and services is $350 billion, state government purchases of goods and services is $375 billion, and local government purchases of goods and services is $200 billion. What figure would GDP use for government purchases? suppose the U.S. exports $800 billion of goods and services and imports $820 billion of goods and services. For the purposes of GDP, net exports are: the least stable component of GDP is gross private domestic investment suppose that during 2000, real GDP increased by $25 billion. Which of the following is necessarily correct? price increased and quantity was constant suppose that nominal GDP increased from $11,700 billion in 2004 to $12,500 billion in 2006. Suppose that over this same period real GDP did not change. In this instance: Suppose nominal GDP in 2004 is $8,000 billion. If the GDP deflator is 125, real GDP is real GDP may not accurately reflect economic activity because it does not include: the value of illegal activities which of the following would not be included in GDP? the money paid for the illegal sale of marijuana the effect of excluding non-market activity would probably cause the relatively largest underestimate of GDP in: recurring fluctuations in the level of economic activity which of the following best exemplifies absolute advantage? a unit of labor in the United States can produce more wheat than a unit of labor in Canada trade based on comparative advantage will increase the well-being of bother trading partners who has an absolute advantage? Anthony can make 12 pizzas or 6 calzones in an hour who has a comparative advantage in making pizza emil can make 3 pizzas or 1 calzone in an hour a tax levied on a good when it crosses a nation's border a tariff on cattle imported from Brazil is eliminated. The most likely effect of the elimination of the tariff will be to: - decrease the price domestic producers receive for the cattle - increase the quantity of cattle bought by domestic buyers - increase the quantity of cattle imported into the country suppose a tariff is imposed on textiles imported into the United States. This will result in: an increase in the amount of textiles sold by domestic producers trade restrictions cause: resources to remain in industries that have a comparative disadvantage which of the following best exemplifies the decreasing cost argument for free trade? as a result of free trade, the New and Improved Automobile Company is able to increase its production, thereby lowering its production costs the national defense argument "Trade restrictions must be imposed on Taiwan, It has begun exporting a large number of computer chips to the United States. We must have a reliable domestic supply of these chips available if war breaks out." This is an example of: suppose strict trade restrictions are imposed in the automobile industry. The most likely result of this action will be to: increase employment in the automobile industry, but decrease employment in other industries which of the following might be used as an argument in support of free trade? free trade can increase the diversity of products available to consumers the difference between what consumers would pay and the price they must pay refers to: the difference between the price that producers receive and what is required to cover costs refers to: |
Private entrepreneurs are likely to make better investment decisions than central planners because
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