MGEA02H3 Study Guide - Final Guide: Business Cycle, Market Failure

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reddonkey706

30 Oct 2017

School

UTSC

Department

Economics for Management Studies

Course

MGEA02H3

Professor

Iris Au

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MGEA02H3 Full Course Notes

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Document Summary

The word economy comes from the greek word for (cid:515)environment. (cid:516) (cid:515)one who manages a household. (cid:516) (cid:515)one who participates in a market. (cid:516) (cid:515)conservation. (cid:516) (cid:515)one who manages a household. (cid:516) Households and economies have each of the following in common except both must allocate scarce resources. face many decisions. must allocate the goods and services they produce. must have a central decisionmaker. must have a central decisionmaker. The word that comes from the greek word for (cid:515)one who manages a household(cid:516) is. Type: m section: 1 difficulty: 2 resources are scarce. populations may increase or decrease over time. wages for households and therefore society fluctuate with business cycles. people, by nature, tend to disagree. resources are scarce. Which of the following is not included in the decisions that every society must make? what goods will be produced who will produce goods what determines consumer preferences who will consume the goods what determines consumer preferences.

Related Questions

21. The English word that comes from the Greek word for "one who manages a household" is

A- market
B- consumer
C- producer
D- economy

Question 22. 22. For a college student who wishes to calculate the true costs of going to college, the costs of room and board

A- should be counted in full, regardless of the costs of eating and sleeping elsewhere.
B- should be counted only to the extent that they are more expensive at college than elsewhere.
C- usually exceed the opportunity cost of going to college.
D- plus the cost of tuition, equals the opportunity cost of going to college.

Question 23. 23. The phenomenon of scarcity stems from the fact that

A- most economies' production methods are not very good.
B- in most economies, wealthy people consume disproportionate quantities of goods and services.
C- governments restrict the production of too many goods and services.
D- resources are limited.

Question 24. 24. Central planning refers to

A- markets guiding economic activity. Today many countries that had this system have abandoned it.
B- markets guiding economic activity. Today many countries that did not have this system have implemented it.
C- government guiding economic activity. Today many countries that had this system have abandoned it.
D- government guiding economic activity. Today many countries that did not have this system have implemented it.

Question 25. 25. Senator Brown wants to increase taxes on people with high incomes and use the money to help the poor. Senator Johnson argues that such a tax will discourage successful people from working and will therefore make society worse off. An economist would say that

A- we should agree with Senator Brown.
B- we should agree with Senator Johnson.
C- a good decision requires that we recognize both viewpoints.
D- there are no tradeoffs between equity and efficiency.

Question 26. 26. Max and Maddy charge people to park on their lawn while attending a nearby craft fair. At the current price of $10, seven people park on their lawn. If they raise the price to $15, they know that only five people will want to park on their lawn. Whether they have seven or five cars parked on their lawn does not affect their costs. From this information, it follows that

A- they should leave the price at $10.
B- it does not matter if they charge $10 or $15.
C- they would do better charging $15 than $10.
D- they should raise the price even more.

Question 27. 27. A circular flow diagram is a model that

A- helps to explain how participants in the economy interact with one another.
B- helps to explain how the economy is organized.
C- incorporates all aspects of the real economy.
D- Both (a) and (b) are correct.

Question 28. 28. In the markets for goods and services in the circular-flow diagram,

A- households provide firms with savings for investment.
B- households provide firms with labor, land, and capital.
C- firms provide households with output.
D- firms provide households with profit.

Question 29. 29. Incomes of U.S. households in the 1970s and 1980s

A- grew rapidly, due to the widespread success of labor unions in pushing up wages during those decades.
B- grew rapidly, due to several increases in the minimum wage during those decades.
C- grew rapidly, due to government policies that discouraged the importation of foreign products during those decades.
D- grew slowly, due to the slow growth of the output of goods and services per hour of U.S. workers' time during those decades.

Question 30. 30. For economists, statements about the world are of two types:

A- assumptions and theories.
B- true statements and false statements.
C- specific statements and general statements.
D- positive statements and normative statements.

marooncat628

Economics is the study of

A. production methods.

B. how society manages its scarce resources.

C. how households decide who performs which tasks.

D. the interaction of business and government.

Point Value: 1

2
When computing the opportunity cost of attending a concert you should include

A. the price you pay for the ticket and the value of your time.

B. the price you pay for the ticket, but not the value of your time.

C. the value of your time, but not the price you pay for the ticket.

D. neither the price of the ticket nor the value of your time.

Point Value: 1

You are considering staying in college another semester so that you can complete a major in economics.? In deciding whether or not to stay you should

A. compare the total cost of your education to the total benefits of your education.

B. compare the total cost of your education to the benefits of staying one more semester.

C. compare the cost of staying one more semester to the benefits of staying one more semester.

D. compare the total benefits of your education to the cost of staying one more semester.

Point Value: 1

Trade between countries tends to

A. reduce both competition and specialization.

B. reduce competition and increase specialization.

C. increase competition and reduce specialization.

D. increase both competition and specialization.

Point Value: 1

5- The "invisible hand" directs economic activity through

A. advertising.

B. prices.

C. central planning.

D. government regulations.

Point Value: 1

6- One reason we need government, even in a market economy, is that

A. there is insufficient market power in the absence of government.

B. property rights are too strong in the absence of government.

C. the invisible hand is not perfect.

D. Both a and b are correct.

Point Value: 1

7.This question has not been answered completely
The government enforces property rights by

A. requiring property owners to pay property taxes.

B. providing police and courts.

C. forcing people to own property.

D. providing public parks and recreation facilities.

Point Value: 1

8.This question has not been answered completely
Causes of market failure include

A. externalities and market power.

B. market power and incorrect forecasts of consumer demand.

C. externalities and foreign competition.

D. incorrect forecasts of consumer demand and foreign competition.

Point Value: 1

9.This question has not been answered completely
Market power refers to the

A. power of a single person or small group to influence market prices.

B. ability of a person or small group to successfully market new products.

C. power of the government to regulate a market.

D. importance of a certain market in relation to the overall economy.

Point Value: 1

10.This question has not been answered completely
Large or persistent inflation is almost always caused by

A. excessive government spending.

B. excessive growth in the quantity of money.

C. foreign competition.

D. higher-than-normal levels of productivity.

Part 1.Choose the correct answer of the following:

1.In a market economy, economic activity is guided by

a.Self-interest and prices

b.The government.

c.Corporations.

d. Central planners.

2. Which of the following decisions must be made by all economies?

a.How much to produce? When to produce? How much does it cost?

b.What to produce? How to produce? For whom to produce?

c.What is the price? Who will produce it? Who will consume it?

d. None of the above

3.Since the resources used in the production of goods and services are limited, society must:

a.Reduce the use of those resources

b.Try to get more resources

c.Make choices about how to use resources

d.Focus on their most abundant resource

4.Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

a.Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.

b.There is no such thing as a free lunch.

c.People buy more when prices are low than when prices are high.

d. No matter how much people earn, they tend to spend more than they earn.

5.If real GDP increased by 2 percent, then

a.Government spending increased by 2 percent

b.The price level has increased by 2 percent

c.Real output/production has increased by 2 percent

d. The increase might have been caused by an increase in the price level or output, but we cannot tell for sure

6. Which of the following would show an efficient economy?

a.Uses the least costly amount of resources available

b.Has a small amount of people who do not work

c.Resources are used to make the most goods and services possible

d.None of the above

7.What is the type of unemployment that occurs when people take time to find a job?

a.cyclical

b.frictional

c.Disguised

d.structural

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MGEA02H3 Study Guide - Final Guide: Business Cycle, Market Failure

MGEA02H3 Full Course Notes

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