ECON-100 Exam Study Set [100% Correct Answers]

ECON-100 Exam Study Set [100% Correct Answers] What is economics? *Ans* A study of how people make choices to achieve goals with resource constraints. What is meant by "the invisible hand?" *Ans* 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? *Ans* 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? *Ans* Yes What is scientific about Social Science? *Ans* 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? *Ans* Adam Smith described how people made production and consumption decisions in the 18th Century. What is a market as discussed in an economics class? *Ans* The coming together of suppliers and demanders of goods and services. What do consumers want to achieve? *Ans* - 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, *Ans* The quantity consumed will decline as consumers respond to higher prices. Why would producers offer more of a product as price rises? *Ans* - 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? *Ans* Price