Economics Exam review part 2

Having to decide whether to spend $15 on a movie or on dinner is an example of what concept?

• debt

• scarcity

• stewardship

• macroeconomics

In the first chapter of The Wealth of Nations, what type of factory does Adam Smith use as an example of division of labor?

• train factory

• pin factory

• steel factory

• textile factory

According to Adam Smith, division of labor helps workers improve their ________ more quickly.

• performance

• wages

• compassion

• health

Why would a subsidy be considered an element of a command economy?

• Because the government is forcing consumers to buy certain goods and services

• Because the government is helping determine who will be able to consume goods and services

• Because the government is helping determine what goods and services are produced

• Because the government is forcing producers to abandon traditional methods of production

The productive resources used to produce goods and services are collectively known as ________.

• natural resources

• capital resources

• factors of production

• financial capital

A state government decides to ban the sale of all gas-powered vehicles in its state. What type of economic system would this be an example of?

• traditional economy

• mercantilist economy

• command economy

• market economy

Why is profit motive an important characteristic of a market economy?

• Without competition, businesses could charge whatever they want for their goods and services.

• Without being selfish, business owners can't make society better for everyone else.

• Without rich entrepreneurs, no wealth would trickle down to the rest of the nation's citizens.

• Without a worthwhile reward, few people would take the risks required to develop new products.

Why do choices always result in opportunity costs?

• because we always have to make all-or-nothing decisions

• because the government charges a tax on all purchases

• because even if we faill, there's always another opportunity around the corner

• because every time we choose one thing, we must give up something else

In Economics in One Lesson, Hazlitt argues that economists who believe that war is beneficial due to increased demand are confusing ________ with demand.

• benefit

• cost

• need

• supply

In his writings, Adam Smith argues that if people were allowed to act in their own self-interest, the marketplace would be directed by an "invisible ________."

• trade

• force

• wealth

• hand