KU Bus 150 Final Exam with 100%
complete solution
Define subjective value and provide an example - correct answer ✔✔no good has any inherent
value. Value is placed by the opinions of individuals. Example of this is if you are freezing
outside and you only have a wool coat, than the coat may be more valuable to you than a
diamond necklace.
Voluntary Exchange - correct answer ✔✔the act of buyers and sellers freely and willingly
engaging in market transactions
Define economics as a model of choice - correct answer ✔✔involves the fact that economics
describes the exchange that happens when buyers and sellers place value on a product and
choose their price
model of choice because they buyers and sellers are putting their preferences and own interest
into a transaction.
define trade - correct answer ✔✔buying and selling between producers and consumers
Explain why wealth creation happens at the point of voluntary exchange - correct answer
✔✔Each party on the sides of voluntary exchange are gaining something they value, being
money or a product
Wealth is created for not only buyer but seller
Define specialization and provide and example - correct answer ✔✔becoming an expert in a
skill.
specialization makes making a pencil possible (I, pencil)
, without specialized workers in different areas, no one person would have been able to come up
with an invention such as a pencil.
What increases along with specialization? - correct answer ✔✔productivity
Define price system - correct answer ✔✔a system in which the value of any forms of property
are determined
Define invisible hand and provide an example - correct answer ✔✔Describes the unintended
greater social benefits and public good brought about by individuals acting in their own self-
interests.
an example used in lecture was Prof Chauvin trying to buy wood one week, and then next the
price was through the roof due to a flood in a Florida.
The events seemingly had nothing to do with one another but both affected each other.
How does specialization increase the opportunities to trade? - correct answer ✔✔A country can
get a good for the lowest possible price from a country that specializes in that producing that
good
What did Adam Smith say about individuals acting in their best interest but will be affected by
markets? - correct answer ✔✔Markets play a trick on human nature and cause them to serve in
the interest of others
How is the trick on human nature in markets played according to Adam Smith using the florist
example? - correct answer ✔✔The florist and I are both interested in buying or selling flowers, I
want the flowers for $20 and the florist is willing to sell them for that price. We each believe we
are acting in our own self interest by exchanging the products, when really we are benefitting
each other and playing into each others self interests
complete solution
Define subjective value and provide an example - correct answer ✔✔no good has any inherent
value. Value is placed by the opinions of individuals. Example of this is if you are freezing
outside and you only have a wool coat, than the coat may be more valuable to you than a
diamond necklace.
Voluntary Exchange - correct answer ✔✔the act of buyers and sellers freely and willingly
engaging in market transactions
Define economics as a model of choice - correct answer ✔✔involves the fact that economics
describes the exchange that happens when buyers and sellers place value on a product and
choose their price
model of choice because they buyers and sellers are putting their preferences and own interest
into a transaction.
define trade - correct answer ✔✔buying and selling between producers and consumers
Explain why wealth creation happens at the point of voluntary exchange - correct answer
✔✔Each party on the sides of voluntary exchange are gaining something they value, being
money or a product
Wealth is created for not only buyer but seller
Define specialization and provide and example - correct answer ✔✔becoming an expert in a
skill.
specialization makes making a pencil possible (I, pencil)
, without specialized workers in different areas, no one person would have been able to come up
with an invention such as a pencil.
What increases along with specialization? - correct answer ✔✔productivity
Define price system - correct answer ✔✔a system in which the value of any forms of property
are determined
Define invisible hand and provide an example - correct answer ✔✔Describes the unintended
greater social benefits and public good brought about by individuals acting in their own self-
interests.
an example used in lecture was Prof Chauvin trying to buy wood one week, and then next the
price was through the roof due to a flood in a Florida.
The events seemingly had nothing to do with one another but both affected each other.
How does specialization increase the opportunities to trade? - correct answer ✔✔A country can
get a good for the lowest possible price from a country that specializes in that producing that
good
What did Adam Smith say about individuals acting in their best interest but will be affected by
markets? - correct answer ✔✔Markets play a trick on human nature and cause them to serve in
the interest of others
How is the trick on human nature in markets played according to Adam Smith using the florist
example? - correct answer ✔✔The florist and I are both interested in buying or selling flowers, I
want the flowers for $20 and the florist is willing to sell them for that price. We each believe we
are acting in our own self interest by exchanging the products, when really we are benefitting
each other and playing into each others self interests
