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TAMU Econ 202 Exam 1 Questions and Answers
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TAMU Econ 202 Exam 1
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TAMU Econ 202 Exam 1Scarcity - answer unlimited wants but limited resources
Three Questions of Economics - answer1. What to produce?
2. How to produce it?
3. Who gets it?
Systems (institutions) - answer the arrangement we use to deal with scarcity
Economics studies... - answer how economies and social institutions address the
problems of the three economic questions.
Scarcity is... - answer the fundamental economic problem
Scare in supply - answer cannot at one time meet the demand of humans
Choice - answer When someone selects between the many unlimited wants which one
wants to satisfy at any given moment
Economist view scarce as - answer everything people want, strive for, or can't achieve
effortlessly
Rules and regulations were created that they - answer govern different aspects of how
the economy operates
Barter - answer One-on-one trade (you have something that I want and i have
something you want), permits specialization
Comparative Advantage - answer “some people are better at certain tasks"
your advantage in producing a good
Trading allows... - answer both parties to consume more
Trade improves... - answer performance
The three basic economic systems - answer-traditional
-market
-command
Traditional Economy - answer1. What?
-same as previous generations
2. How?
, -same way as previous generations
3. Who?
-people around you (barter system)
(culture, customs, beliefs)
Command Economy - answer1. Whatever the government tells you
2. however the government tells you
3. give to whoever government tells you to give it to (party members first)
(North Korea)
Market Economy - answer1. whatever people will buy
2. as cheap as possible but where people will still buy
3. whoever wants it
Mixed Economy - answer limited government involvement while also applying free
market concepts
Market trade... - answer significantly expands the scope of both trade and specialization
Markets are very powerful at - answer allocating resources
Adam Smith says - answer “failure" is efficient in an economy and that the government
should step out & sell freely
What year did Adam Smith write "Wealth of Nations"? - answer1776
The key to efficiency is that... - answer people are investing their own money
Buyers who are willing to pay more than the price of a good... - answer receive the good
in equilibrium
If the government left self-interested traders to compete with one another than... -
answer markets are guided to positive outcomes by an "invisible hand"
Low prices are charged to... - answer maximize revenue through gain in market share of
undercutting competitors
Logical Path - answer Simple arithmetic.
We assume:
-numbers
-cardinals
-0,1,2,3,4
-1+1=2
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