Basic Principles of Economics | Answer Key

University:
Eastern Kentucky University
Course:
ECO 120 | Economic Reasoning and Issues
Academic year:

2020
Views:

171

Pages:

3
Author:

Alessandro Nelson

What is the name given to the development of a new good or service? Invention According to the rationality assumption, people: Do not intentionally make decisions that would leave them worse off. Which of the following countries has an economy where most of the resource allocation is determined by a central planning authority? North Korea The previous table shows the marginal benefit that Ted earns from keeping his store open one more hour. Ted has a marginal cost of $90 per hour. How many hours should Ted stay open? 22 hours Ted needs to stay open as long as his marginal benefit exceeds his marginal cost. Given Ted has a marginal cost of $90 per hour, he should stay open for 22 hours. If he stays open one more hour beyond that he reaches a point where the marginal benefit of staying open falls below his marginal cost. A glance at the table shows that his marginal benefit per hour for 23 hours and more starts at $70 an hour and falls to zero at hour 26. He will lose money for every hour open beyond 22 hours. One of the primary goals of most governments with regard to the economy is: Full employment Economics: is concerned with how people respond to incentives Macroeconomics is concerned with all of the following except: political party affiliation The principle of opportunity cost evolves from the concept of: Scarcity The stock of computers, factory buildings, and machine tools used to produce goods is known as: physical capital One of the first steps in deciding whether to complete your education is to: evaluate the marginal cost and marginal benefit of that decision. Understanding economics can help policymakers devise strategies to do all of the following except: guarantee new technological discoveries. The resources provided by nature and used to produce goods and services are also known as: Natural resources The resources provided by nature and used to produce goods and services are also known as natural resources. Some examples of natural resources include fertile land, mineral deposits, oil, natural gas, and water. These natural resources are often collectively referred to by economists as land. The factors of production include land, labour and capital and are all used in some combination to produce goods and services. Macroeconomics can be used to understand all of the topics listed below, except: how a consumer decides between the purchase of two different cars In what type of economy does the government decide how economic resources will be allocated? a centrally planned economy Economic decisions are made at every level in society. When we try to decide which production method to use among several alternatives, which of the following key economic questions are we trying to answer? How do we produce the products? Which of the following is a positive economic statement? If minimum wage rates rise, then unemployment will rise. Economics is the study of choice under conditions of: Scarcity When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of? A market Which of the following is not an opportunity cost of attending college? The cost of housing A sustained increase in the overall level of prices is known as: inflation

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