ECON 2010 (EXAM 1) QUESTIONS AND
CORRECT ANSWERS
Time ✅✅CORRECT ANSW-Doing something to save money when you could be making money is
inefficient
(dentist-- oral surgeon)
Economics ✅✅CORRECT ANSW-the study of how we deal with the problem of scarcity
Hobbes ✅✅CORRECT ANSW-Economy where everyone is a consumer results in fall of production
Government role in economics ✅✅CORRECT ANSW-Encourages production and punishes those
who don't produce. (Enforcer and protector)
Pure Socialism ✅✅CORRECT ANSW-- resources are collectively owned
- all citizens work for the government
-government organizes production
(need/equal shares)
Government owns land and buildings
Collective ownership (belongs to everyone but government is the administer). Nothing is owned
individually.
Everyones gets equal shares for their needs
Problems for productivity and innovation:
Disincentive to work hard and or choose a complicated profession.
Subject to corruption
Pure Capitalism ✅✅CORRECT ANSW--Private ownership of resources
-Resources (Land, Labor, Capital)
,-Entrepreneurship
If you don't contribute resources, you don't receive anything
require skills and education
Circular Flow Model (capitalism) ✅✅CORRECT ANSW-Household
Factor Marketing
Firms
Product Market
Household ---resources(land, capital, labor, entrepre)---> <-----profits (w + r+ i + TT ) Factor markets -
--> resources--> <---payment for resources-- Firms----goods and services--><----revenue---product
markets----goods and services--><---payment---Household
Exam 1 contents ✅✅CORRECT ANSW-Chapters 1,2,3
-class notes
-handouts
(60 multiple choice questions)
Scarcity ✅✅CORRECT ANSW-(nothing to do with poverty) in which the society does not have
enough resources ----conflict----
the consequence of the inability of each economy to satisfy all the wants of all its members with the
resources available to the economy
1) Human wants are unlimited
2) Resources are limited
------land, labor, capital, entrepreneurship
Dealing with scarcity ✅✅CORRECT ANSW-pure capitalism
pure socialism- corruption, perverse incentives
Taxation ✅✅CORRECT ANSW-Leakage (provide for public good-- not for private)
used to run the government
, Transfer Payments (TP) ✅✅CORRECT ANSW-tax money makers to transfer income to allow those
who lose income to maintain standard of living
Difference between pure capitalism and capitalism in the US. ✅✅CORRECT ANSW-difference is
income redistribution
Entrepreneurship (capitalism) ✅✅CORRECT ANSW-Organizes production
Bears the risk of business failure
innovates (gambling)
critical! Without entrepreneurship we can not have growth
Capital (capitalism) ✅✅CORRECT ANSW-Human
Physical
Financial
Government (capitalism) ✅✅CORRECT ANSW-1) maintains law and order
--determines property rights
2) provides public goods
--ex: mosquito protection
--solution for community rather than privately
Opportunity cost ✅✅CORRECT ANSW-buying something with money and losing the opportunity
to get interest off of it
Resource------> Compensation (Capitalism)
1) Land
2) Labor
3) capital
4) entrepreneur ✅✅CORRECT ANSW-Compensation (return)
CORRECT ANSWERS
Time ✅✅CORRECT ANSW-Doing something to save money when you could be making money is
inefficient
(dentist-- oral surgeon)
Economics ✅✅CORRECT ANSW-the study of how we deal with the problem of scarcity
Hobbes ✅✅CORRECT ANSW-Economy where everyone is a consumer results in fall of production
Government role in economics ✅✅CORRECT ANSW-Encourages production and punishes those
who don't produce. (Enforcer and protector)
Pure Socialism ✅✅CORRECT ANSW-- resources are collectively owned
- all citizens work for the government
-government organizes production
(need/equal shares)
Government owns land and buildings
Collective ownership (belongs to everyone but government is the administer). Nothing is owned
individually.
Everyones gets equal shares for their needs
Problems for productivity and innovation:
Disincentive to work hard and or choose a complicated profession.
Subject to corruption
Pure Capitalism ✅✅CORRECT ANSW--Private ownership of resources
-Resources (Land, Labor, Capital)
,-Entrepreneurship
If you don't contribute resources, you don't receive anything
require skills and education
Circular Flow Model (capitalism) ✅✅CORRECT ANSW-Household
Factor Marketing
Firms
Product Market
Household ---resources(land, capital, labor, entrepre)---> <-----profits (w + r+ i + TT ) Factor markets -
--> resources--> <---payment for resources-- Firms----goods and services--><----revenue---product
markets----goods and services--><---payment---Household
Exam 1 contents ✅✅CORRECT ANSW-Chapters 1,2,3
-class notes
-handouts
(60 multiple choice questions)
Scarcity ✅✅CORRECT ANSW-(nothing to do with poverty) in which the society does not have
enough resources ----conflict----
the consequence of the inability of each economy to satisfy all the wants of all its members with the
resources available to the economy
1) Human wants are unlimited
2) Resources are limited
------land, labor, capital, entrepreneurship
Dealing with scarcity ✅✅CORRECT ANSW-pure capitalism
pure socialism- corruption, perverse incentives
Taxation ✅✅CORRECT ANSW-Leakage (provide for public good-- not for private)
used to run the government
, Transfer Payments (TP) ✅✅CORRECT ANSW-tax money makers to transfer income to allow those
who lose income to maintain standard of living
Difference between pure capitalism and capitalism in the US. ✅✅CORRECT ANSW-difference is
income redistribution
Entrepreneurship (capitalism) ✅✅CORRECT ANSW-Organizes production
Bears the risk of business failure
innovates (gambling)
critical! Without entrepreneurship we can not have growth
Capital (capitalism) ✅✅CORRECT ANSW-Human
Physical
Financial
Government (capitalism) ✅✅CORRECT ANSW-1) maintains law and order
--determines property rights
2) provides public goods
--ex: mosquito protection
--solution for community rather than privately
Opportunity cost ✅✅CORRECT ANSW-buying something with money and losing the opportunity
to get interest off of it
Resource------> Compensation (Capitalism)
1) Land
2) Labor
3) capital
4) entrepreneur ✅✅CORRECT ANSW-Compensation (return)
