Midterm 1 MGT 100 UPDATED ACTUAL
Exam Questions and CORRECT Answers
What is potlatch - CORRECT ANSWER - Theories of man: sociological status,
conspicuous consumption and conspicuous waste.
Objective: give away or destroy more than rival
Existed because of "economic conditions". it showed that the Chief was entitled to "chiefly
status"
"A universial mechanism for assuring production and distribution of wealth among people who
have notyet fully acquired a ruling class"
10 principles of economics - CORRECT ANSWER - 1. People face trade-offs
2. The cost of something is what you give up to get it
3. Rational people think at the margin
4. People respond to incentives
5. Trade can make everyone better off
6. Markets are usually a good way to organize economic activity
7. Governments can sometimes improve market outcomes
8. A country's standard of living depends on its ability to produce goods and services
9. Prices rise when the government prints too much money
10. Society faces a short-run trade-off between inflation and unemployment
How do potlatch and market economic systems differ/similar - CORRECT ANSWER -
Potlatch- obligated, socially meaningful, ambiguity of exchange ratios
markets- voluntary, anonymous, exchange ratios in terms of prices
, What is the key takeaways from Hayek - CORRECT ANSWER - Central authority can't
possess and process all info for optimal economic planning. the market, through the price
system, allows ppl to make decentralized decisions based on local knowledge which will prove
most efficient of resource allocation
What is the law of demand - CORRECT ANSWER - All other things equal, when the
price of a good rises, the quantity demanded of the good falls.
What is the law of supply - CORRECT ANSWER - other things equal, when the price of a
good rises, the quantity supplied of the good rises.
How do you find a market demand/supply for a good - CORRECT ANSWER - Market
demand is the sum of all of the individual demands. Market supply is the sum of all of the
individual supplys.
Movement along the curve vs shifting of the curve - CORRECT ANSWER - A change in
supply/demand is a shift in the curve. a change in the quantity supplied/demanded is a movement
along the curve
Shifters of supply - CORRECT ANSWER - input prices, technology, number of sellers,
expectations about the future
Shifters of demand - CORRECT ANSWER - number of buyers, income, price of related
goods, tastes, expectations of the future
What is market equilibrium. how do you calculate it. - CORRECT ANSWER - It is where
the price has reached the level where quantity supplied equals quantity demanded
What is a shortage and a surplus? - CORRECT ANSWER - Surplus is excess supply,
where quantity supplied is greater than quantity demanded. shortage is excess demand, where
quantity demanded is greater than quantity supplied.
Exam Questions and CORRECT Answers
What is potlatch - CORRECT ANSWER - Theories of man: sociological status,
conspicuous consumption and conspicuous waste.
Objective: give away or destroy more than rival
Existed because of "economic conditions". it showed that the Chief was entitled to "chiefly
status"
"A universial mechanism for assuring production and distribution of wealth among people who
have notyet fully acquired a ruling class"
10 principles of economics - CORRECT ANSWER - 1. People face trade-offs
2. The cost of something is what you give up to get it
3. Rational people think at the margin
4. People respond to incentives
5. Trade can make everyone better off
6. Markets are usually a good way to organize economic activity
7. Governments can sometimes improve market outcomes
8. A country's standard of living depends on its ability to produce goods and services
9. Prices rise when the government prints too much money
10. Society faces a short-run trade-off between inflation and unemployment
How do potlatch and market economic systems differ/similar - CORRECT ANSWER -
Potlatch- obligated, socially meaningful, ambiguity of exchange ratios
markets- voluntary, anonymous, exchange ratios in terms of prices
, What is the key takeaways from Hayek - CORRECT ANSWER - Central authority can't
possess and process all info for optimal economic planning. the market, through the price
system, allows ppl to make decentralized decisions based on local knowledge which will prove
most efficient of resource allocation
What is the law of demand - CORRECT ANSWER - All other things equal, when the
price of a good rises, the quantity demanded of the good falls.
What is the law of supply - CORRECT ANSWER - other things equal, when the price of a
good rises, the quantity supplied of the good rises.
How do you find a market demand/supply for a good - CORRECT ANSWER - Market
demand is the sum of all of the individual demands. Market supply is the sum of all of the
individual supplys.
Movement along the curve vs shifting of the curve - CORRECT ANSWER - A change in
supply/demand is a shift in the curve. a change in the quantity supplied/demanded is a movement
along the curve
Shifters of supply - CORRECT ANSWER - input prices, technology, number of sellers,
expectations about the future
Shifters of demand - CORRECT ANSWER - number of buyers, income, price of related
goods, tastes, expectations of the future
What is market equilibrium. how do you calculate it. - CORRECT ANSWER - It is where
the price has reached the level where quantity supplied equals quantity demanded
What is a shortage and a surplus? - CORRECT ANSWER - Surplus is excess supply,
where quantity supplied is greater than quantity demanded. shortage is excess demand, where
quantity demanded is greater than quantity supplied.
