Chapter 1 and 2 Econ Test
Essay
1.
Identifying Central Issues Why is cost, measured in dollars alone, an insufficient
measure of value? What concept do economists use to better evaluate a decision?
Why is it important?
2.
Making Comparisons What is the difference between a factor market and a product
market? Explain how these markets are dependent on each other.
3.
Making Generalizations Why is the study of economics important even for people
who are not going to be business owners or investors?
4.
Would an economist think that the teenager in the cartoon is expressing a need or a
want? Explain.
5.
Suppose that Fred’s Paints has been making 10 gallons of blue paint and no red paint.
Fred wants to start producing 3 gallons of red paint. According to the production
possibilities curve, what is the company’s opportunity cost of making 3 gallons of red
paint? Explain.
6.
The Ferrets professional baseball team has only enough money to sign either one superstar or
three young players. The superstar could help the team win the championship this year but
would not be with the team long. The young players are talented but not yet ready for the
major leagues.
Define scarcity and explain how scarcity is involved in the choice that the Ferrets
have to make.
7.
According to the graph, could this country produce $6 billion worth of military goods
and $5 billion worth of civilian goods? Explain.
8.
Describe the relationship shown in this economic model.
9.
Which graph, Graph A or Graph B, supports the theory that a direct relationship exists
between increases in the minimum wage rate and increases in teenage unemployment?
Explain.
10.
Widgets produced
Hours of work required to
produce the widgets
Day 1
Day 2
Day 3
10
8
10
7.5
10
7
The table shows data for a company that produces one product: widgets. Over these
three days, is the company’s productivity increasing, decreasing, or staying the same?
Explain.
11.
What does the diagram depict? Describe the process.
12.
“Nothing is particularly hard if you divide it into small jobs.”
–Henry Ford
Discuss how the quote from Henry Ford applies to building a car.
13.
Making Comparisons Compare a command economy to a market economy by
listing a strength and a weakness of each. State how each type of economy satisfies
the wants and needs of individuals.
14.
Making Inferences How do traditional economies discourage new ideas for
improving the economic well-being of the people?
15.
Analyzing Information List and explain four characteristics of a free enterprise
economy.
16.
When Ronald Reagan ran for president in 1980 he rejected the prevailing economic theory.
He believed in free markets and opposed the idea that the federal government should
influence the ups and downs of business with its policies. He particularly rejected the idea of
government spending more than it takes in and the national debt that results.
Source: Adapted from "Reaganomics Shape 1980s Economy." 1997.
Based on this passage, do you think Ronald Reagan would have favored a
government-sponsored program to give jobs to unemployed people? Explain.
17.
Minimum-wage workers might get a raise. Senator Tom Daschle...wants to raise the
[minimum wage] rate $1.50 over a year and a half...Critics say hiking the minimum wage
cuts down on the number of new jobs employers can add. It may also force employers to cut
back on the hours workers work.
From Investor’s Business Daily, June 6, 2001
Based on this passage, would an increase in the minimum wage be a trade-off from
the point of view of minimum-wage workers? Explain.