ECON 100 QUESTIONS AND ANSWERS WITH CERTIFIED SOLUTIONS

ECON 100 QUESTIONS AND ANSWERS WITH CERTIFIED SOLUTIONS What is economics? A study of how people make choices to achieve goals with resource constraints. What is meant by "the invisible hand?" 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? 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? Yes What is scientific about Social Science? 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? Adam Smith described how people made production and consumption decisions in the 18th Century. What is a market as discussed in an economics class? The coming together of suppliers and demanders of goods and services. What do consumers want to achieve? - 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, The quantity consumed will decline as consumers respond to higher prices. Why would producers offer more of a product as price rises? - 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? Price. From an economic perspective, a choice is: A decision that must be made because resources are scarce. You know you have incurred a cost when: You must