ECON EXAM QUESTIONS AND ANSWERS
Which of the following examples represents the relationship between division of labor
and production? - Answers - A nurse takes patients' vital signs while the doctor
focuses on diagnosis so that more patients can receive care
Scarcity is a problem because... - Answers - There are not enough resources to
produce all the goods and services people want to purchase.
Which of the following statements describes microeconomics? - Answers - The price of
beef increased by 15% last month due to a cyber attack on a major beef processing
firm.
Someone criticizes the government for increasing interest rates but approving the
increase in government spending. They are criticizing the government's ____policy and
praising the government ___ policy. - Answers - Monetary, Fiscal
The circular flow diagram describes... - Answers - How firms and households carry out
economic activities through the market for input or factors of production and the market
for goods and services.
A good economic theory .... - Answers - captures the essence of the economic
concepts and facilitates their understanding.
According to the circular flow diagram, households... - Answers - Are sellers in the
labor market and buyers in the goods and services market.
In market economies, most decisions are made by ___, while in command economies,
most economic decisions are made by ___. - Answers - Private citizens and firms; the
government
Gross Domestic Product represents... - Answers - The value of the total production in
a country
Which of the following elements demonstrate the degree of globalization? - Answers -
High levels of trade and exchange between countries.
What is a black market, and under what economic condition is it most likely to thrive? -
Answers - The black market is an underground buy and sell market based on
opposition of the government's regulations. More regulations/laws created in regular
economic market, the more the black market will thrive. Scarcity of certain goods
caused primarily by government regulation will only grow the black market into a more
utilized system.
,When nations desire a healthy macroeconomy, they typically focus on several goals:.
Three are: - Answers - A nation desires these three goals when it comes to a healthy
macroeconomy: The growth in the standard of living, low unemployment, and low
inflation.
How does microeconomics relate to macroeconomics? - Answers - Microeconomics is
related to macroeconomics because micro is complementary to macro. Decisions made
in the microeconomies, such as businesses hiring more employees lowering the
unemployment rate. The Macroeconomies performance is dependent on the what
decisions households and businesses make. Macroeconomy looks at the environment
as a whole.
Clem Oatley could grow wheat and barley. He could grow 75 bushels of wheat or 125
bushels of barley using the same resources on an acre of his land. The price of wheat is
$2.00 per bushel and the price of barley $ 0.80. Show the benefits to Clem from
specialization. What should he specialize in? - Answers - Clem specializing in a
specific talent such as growing wheat, clem will start to find themselves with a more
profitable market.
The two main tools of macroeconomic policy include monetary policy and fiscal policy.
Briefly describe the main components of each.
Your Answer:
Monetary Policy involves regulations issued on bank lenders, the interest rates, and
financial capital markets. Fiscal Policy involves how the government spends and issues
its money. - Answers -
Recent decades have seen a trend toward globalization, which means that buying and
selling in markets have crossed national borders to an increasing extent. As a result,
firms and workers from different countries are increasingly interconnected. Globalization
has occurred for a number of reasons. List three reasons and briefly describe their
effect contributing toward globalization.
Your Answer:
There are several reasons to why globalization begins to occur: Improvements in
shipping cargo, Air travel, and the internet being able to distribute information. -
Answers -
Each year, researchers at the Heritage Foundation and the Wall Street Journal look at
50 different categories of economic freedom for countries around the world. In each
category, they give each nation a score based on extent of economic freedom in that
category. What sorts of questions regarding the level of economic freedom might these
researchers have asked within this survey which would help rank nations' economic
freedom? Please list at least three questions.
Your Answer:
Do the people of country have the freedom of choice when it comes to choosing labor?
,Do businesses have the ability to choose what they can produce and sell / or hire or
fire?
Do banks or the governments have choice in loans? - Answers -
How can a group of workers, each specializing in certain tasks, produce so much more
than the same number of workers who try to produce the entire good or service by
themselves? Adam Smith offered three reasons. List them and briefly describe the
rationale behind each.
Your Answer:
Specialization for works on small tasks makes it easier for production because workers
that have particular interests or skills will effectively finish a product faster and with
higher quality. This can also help economically expand a business with the production
of scale, meaning the average cost of producing each unit declines. - Answers -
The formal study of economics began when Adam Smith (1723-1790) published his
famous book The Wealth of Nations in 1776. In the first chapter of The Wealth of
Nations, Smith introduces the idea of the division of labor. Define "division of labor" and
illustrate with an example.
Your Answer:
The division of labor is an effective economic system for workers and firms to produce
products at a faster and higher quality.
An example of division of labor is: building a computer.
Building a computer takes multiple tasks to complete. There is the motherboard, the
ram, the graphics card, the cpu, and the casing. Creating a a computer all together
would take for ever to finish. There needs to be separate divisions of labor where
workers specialize in making each individual piece to the computer otherwise the rate of
production we be so low that a business couldn't thrive. - Answers -
Describe the characteristics you would expect to find in a mixed economy which is
mostly market oriented.
Your Answer:
Some characteristics would consist of allowing supply and demand to control prices,
employment, the promotion of innovation, and protection of property. - Answers -
Describe the economic and technological changes that led to the rise of globalization.
Your Answer:
As the time goes about, technology and new innovation begin to rise. Technology over
the past decade has rapidly become more advanced making it easy for anyone to
access any information. Information originally needed to be traded in order for a market
to thrive successfully. Now that the internet came to be, information is everywhere and
easily accessible even over seas. Rapid access to information can have a huge
involvement in globalization. - Answers -
, Explain how scarcity in resources or inputs of production affects the production of goods
and services
Your Answer:
Scarcity in resources or inputs can have a huge impact in price. Less supply means
higher prices lowering the demand from households/businesses. - Answers -
Alex has a budget of $100 a month for movie tickets and restaurant meals. A movie
ticket will cost $10 and a restaurant meal costs $20. Which of the following
combinations is part of Alex's budget constraint? - Answers - 2 movie tickets and 4
restaurant meals
Irfan has the budget constraint described in the graph below. If Irfan purchases 1 hour
of tutoring per month and decides to increase his purchases to 2 hours per month, what
is the opportunity cost of the 2nd tutoring hour? - Answers - 2 restaurant meals
Martha spends 5 hours of free time exercising and playing music per day. The table
below represents the level of utility she receives from the various combinations of
exercise and music activities. For instance, if she only plays music, her total utility from
exercise will be 0, and the utility from music will be 50. If she exercises for 1 hour, she
will receive a level of utility of 25. Utility is measured in 'utils'; those numbers are
arbitrary and designed to quantify the benefits received from various actions.
Utility from Exercise
Utility from Music
0 utils from 0 hours of exercise50 utils from 5 hours of music25 utils for 1 hours of
exercise45 utils from 4 hours of music40354520500
The utility patterns in the table illustrate the law of marginal diminishing utility because
... - Answers - The increase in utility for each additional hour Martha exercises falls
Martha spends 5 hours of free time exercising and playing music per day. The table
below represents the level of utility she receives from the various combinations of
exercise and music activities. For instance, if she only plays music, her total utility from
exercise will be 0, and the utility from music will be 50. If she exercises for 1 hour, she
will receive a level of utility of 25. Utility is measured in 'utils'; those numbers are
arbitrary and designed to quantify the benefits received from various actions.
Utility for ExerciseUtility from Music0 utils from 0 hours of exercise50 utils from 5 hours
of music25 utils for 1 hours of exercise45 utils from 4 hours of music40354520500
Marginal analysis will help Martha in her decision making regarding how to spend her
free time because ... - Answers - All answers are correct.
The graph below represents the Production Possibility Frontier for the country of OZ for
2 groups of goods or services: Infrastructure (like bridges and roads) and technology
and research. - Answers - If the country of OZ is currently producing 10 infrastructure
projects and wants to produce 5 more, the opportunity cost would be 2 research and
technology projects.
Which of the following examples represents the relationship between division of labor
and production? - Answers - A nurse takes patients' vital signs while the doctor
focuses on diagnosis so that more patients can receive care
Scarcity is a problem because... - Answers - There are not enough resources to
produce all the goods and services people want to purchase.
Which of the following statements describes microeconomics? - Answers - The price of
beef increased by 15% last month due to a cyber attack on a major beef processing
firm.
Someone criticizes the government for increasing interest rates but approving the
increase in government spending. They are criticizing the government's ____policy and
praising the government ___ policy. - Answers - Monetary, Fiscal
The circular flow diagram describes... - Answers - How firms and households carry out
economic activities through the market for input or factors of production and the market
for goods and services.
A good economic theory .... - Answers - captures the essence of the economic
concepts and facilitates their understanding.
According to the circular flow diagram, households... - Answers - Are sellers in the
labor market and buyers in the goods and services market.
In market economies, most decisions are made by ___, while in command economies,
most economic decisions are made by ___. - Answers - Private citizens and firms; the
government
Gross Domestic Product represents... - Answers - The value of the total production in
a country
Which of the following elements demonstrate the degree of globalization? - Answers -
High levels of trade and exchange between countries.
What is a black market, and under what economic condition is it most likely to thrive? -
Answers - The black market is an underground buy and sell market based on
opposition of the government's regulations. More regulations/laws created in regular
economic market, the more the black market will thrive. Scarcity of certain goods
caused primarily by government regulation will only grow the black market into a more
utilized system.
,When nations desire a healthy macroeconomy, they typically focus on several goals:.
Three are: - Answers - A nation desires these three goals when it comes to a healthy
macroeconomy: The growth in the standard of living, low unemployment, and low
inflation.
How does microeconomics relate to macroeconomics? - Answers - Microeconomics is
related to macroeconomics because micro is complementary to macro. Decisions made
in the microeconomies, such as businesses hiring more employees lowering the
unemployment rate. The Macroeconomies performance is dependent on the what
decisions households and businesses make. Macroeconomy looks at the environment
as a whole.
Clem Oatley could grow wheat and barley. He could grow 75 bushels of wheat or 125
bushels of barley using the same resources on an acre of his land. The price of wheat is
$2.00 per bushel and the price of barley $ 0.80. Show the benefits to Clem from
specialization. What should he specialize in? - Answers - Clem specializing in a
specific talent such as growing wheat, clem will start to find themselves with a more
profitable market.
The two main tools of macroeconomic policy include monetary policy and fiscal policy.
Briefly describe the main components of each.
Your Answer:
Monetary Policy involves regulations issued on bank lenders, the interest rates, and
financial capital markets. Fiscal Policy involves how the government spends and issues
its money. - Answers -
Recent decades have seen a trend toward globalization, which means that buying and
selling in markets have crossed national borders to an increasing extent. As a result,
firms and workers from different countries are increasingly interconnected. Globalization
has occurred for a number of reasons. List three reasons and briefly describe their
effect contributing toward globalization.
Your Answer:
There are several reasons to why globalization begins to occur: Improvements in
shipping cargo, Air travel, and the internet being able to distribute information. -
Answers -
Each year, researchers at the Heritage Foundation and the Wall Street Journal look at
50 different categories of economic freedom for countries around the world. In each
category, they give each nation a score based on extent of economic freedom in that
category. What sorts of questions regarding the level of economic freedom might these
researchers have asked within this survey which would help rank nations' economic
freedom? Please list at least three questions.
Your Answer:
Do the people of country have the freedom of choice when it comes to choosing labor?
,Do businesses have the ability to choose what they can produce and sell / or hire or
fire?
Do banks or the governments have choice in loans? - Answers -
How can a group of workers, each specializing in certain tasks, produce so much more
than the same number of workers who try to produce the entire good or service by
themselves? Adam Smith offered three reasons. List them and briefly describe the
rationale behind each.
Your Answer:
Specialization for works on small tasks makes it easier for production because workers
that have particular interests or skills will effectively finish a product faster and with
higher quality. This can also help economically expand a business with the production
of scale, meaning the average cost of producing each unit declines. - Answers -
The formal study of economics began when Adam Smith (1723-1790) published his
famous book The Wealth of Nations in 1776. In the first chapter of The Wealth of
Nations, Smith introduces the idea of the division of labor. Define "division of labor" and
illustrate with an example.
Your Answer:
The division of labor is an effective economic system for workers and firms to produce
products at a faster and higher quality.
An example of division of labor is: building a computer.
Building a computer takes multiple tasks to complete. There is the motherboard, the
ram, the graphics card, the cpu, and the casing. Creating a a computer all together
would take for ever to finish. There needs to be separate divisions of labor where
workers specialize in making each individual piece to the computer otherwise the rate of
production we be so low that a business couldn't thrive. - Answers -
Describe the characteristics you would expect to find in a mixed economy which is
mostly market oriented.
Your Answer:
Some characteristics would consist of allowing supply and demand to control prices,
employment, the promotion of innovation, and protection of property. - Answers -
Describe the economic and technological changes that led to the rise of globalization.
Your Answer:
As the time goes about, technology and new innovation begin to rise. Technology over
the past decade has rapidly become more advanced making it easy for anyone to
access any information. Information originally needed to be traded in order for a market
to thrive successfully. Now that the internet came to be, information is everywhere and
easily accessible even over seas. Rapid access to information can have a huge
involvement in globalization. - Answers -
, Explain how scarcity in resources or inputs of production affects the production of goods
and services
Your Answer:
Scarcity in resources or inputs can have a huge impact in price. Less supply means
higher prices lowering the demand from households/businesses. - Answers -
Alex has a budget of $100 a month for movie tickets and restaurant meals. A movie
ticket will cost $10 and a restaurant meal costs $20. Which of the following
combinations is part of Alex's budget constraint? - Answers - 2 movie tickets and 4
restaurant meals
Irfan has the budget constraint described in the graph below. If Irfan purchases 1 hour
of tutoring per month and decides to increase his purchases to 2 hours per month, what
is the opportunity cost of the 2nd tutoring hour? - Answers - 2 restaurant meals
Martha spends 5 hours of free time exercising and playing music per day. The table
below represents the level of utility she receives from the various combinations of
exercise and music activities. For instance, if she only plays music, her total utility from
exercise will be 0, and the utility from music will be 50. If she exercises for 1 hour, she
will receive a level of utility of 25. Utility is measured in 'utils'; those numbers are
arbitrary and designed to quantify the benefits received from various actions.
Utility from Exercise
Utility from Music
0 utils from 0 hours of exercise50 utils from 5 hours of music25 utils for 1 hours of
exercise45 utils from 4 hours of music40354520500
The utility patterns in the table illustrate the law of marginal diminishing utility because
... - Answers - The increase in utility for each additional hour Martha exercises falls
Martha spends 5 hours of free time exercising and playing music per day. The table
below represents the level of utility she receives from the various combinations of
exercise and music activities. For instance, if she only plays music, her total utility from
exercise will be 0, and the utility from music will be 50. If she exercises for 1 hour, she
will receive a level of utility of 25. Utility is measured in 'utils'; those numbers are
arbitrary and designed to quantify the benefits received from various actions.
Utility for ExerciseUtility from Music0 utils from 0 hours of exercise50 utils from 5 hours
of music25 utils for 1 hours of exercise45 utils from 4 hours of music40354520500
Marginal analysis will help Martha in her decision making regarding how to spend her
free time because ... - Answers - All answers are correct.
The graph below represents the Production Possibility Frontier for the country of OZ for
2 groups of goods or services: Infrastructure (like bridges and roads) and technology
and research. - Answers - If the country of OZ is currently producing 10 infrastructure
projects and wants to produce 5 more, the opportunity cost would be 2 research and
technology projects.
