economics exam 1 – microeconomics ch 1-3

Even though the Garden of Eden was a system for the production and distribution of goods and services, why was it not an economy?

What is the definition of economics used in the textbook?

A feature article in the New York Times laid out the economic woes and worries of middle-class Americans - one of the most affluent groups of human beings ever to inhabit this planet. Although this story included a picture of a middle-class American family in their own swimming pool, the main headline read: "The American Middle, Just Getting By." What does the author try to explain with this example?

The values of natural resources per capita in Uruguay and Venezuela are several times what they are in Japan and Switzerland, but real income per capita in Japan and Switzerland is more than double that of Uruguay and several times that of Venezuela. What is the point the author tries to make with this example? Choose the best answer.

For a society as a whole, money is just an artificial device to get real things done. How does the author convince us of it? He simply points out that:

What determines whether a country is poverty stricken or prosperous?

Economics is something that tells you how to make money or run a business or predict the ups and downs of the stock market.

In China, the number of people living on a dollar a day or less fell from 374 million - one third of the country's population in 1990 - to 128 million in 2004, now just 10 percent of a growing population. What made nearly a quarter of a billion Chinese better off?

SHORT ANSWER: When a military medical team arrives on a battlefield where soldiers have a variety of wounds, some of the wounded are near death and have little chance of being saved, while others have a fighting chance if they get immediate care, and still others are only slightly wounded and will probably recover whether they get immediate attention or not. If the medical team does not allocate its time and medications efficiently, some wounded soldiers will die needlessly, while time is being spent attending to others not as urgently in need of care or still others whose wounds are so devastating that they will probably die in spite of anything that can be done for them. What does the author try to tell us with this example?

The last President of the Soviet Union Mikhail Gorbachev, is said to have asked British Prime Minister Margaret Thatcher: How do you see to it that people get food? What was her answer?

High prices are the fundamental reason why we cannot all live in beach-front houses.

If vast new rich iron ore deposits were suddenly discovered somewhere, perhaps no more than one percent of the population would be aware of it. How would the vast majority of people who have no idea about the discovery benefit from it?

In a free market economic system, what forces producers to produce what consumers want and to stop producing what consumers don't want? Choose all that apply.

At one time in the Soviet Union, all the distribution centers were filled with moleskin. Industry was unable to use them all and they often rot in warehouses before they could be processed. Fundamentally, what caused the surplus?

The problem with central planning is that some particular planners have made some particular mistakes.

Since scarce resources have alternative uses, the value placed on one of these uses by one individual or company sets the cost that has to be paid by others who want to bid some of these resources away for their own use. What does this mean from the standpoint of the economy as a whole?

A visitor to the Soviet Union in 1987 reported "long lines of people still stood patiently for hours to buy things: on one street corner people were waiting to buy tomatoes from a cardboard box, one to a customer, and outside a shop next to our hotel there was a line for three days, about which we learned that on the day of our arrival that shop had received a new shipment of men's undershirts." Fundamentally, why did all of these happen?

Far more resources were used to produce a given amount of output in the Soviet economy as compared to a price-coordinated economic system such as that in Japan, Germany, and other market economies. According to economists, Nikolai Shmelev and Vladimir Popov, the Soviet economy, to make one ton of copper, it used about 1,000 kilowatt hours of electrical energy, as against 300 in West Germany. To produce one ton of cement, it used twice the amount of energy that Japan did. What did the Soviet Union lack?

When many African colonies achieved national independence in the 1960s, a famous bet was made between the president of Ghana and the president of the neighboring Ivory Coast as to which country would be more prosperous in the years ahead. At that time, Ghana was not only more prosperous than the Ivory Coast, it had more natural resources. Which country became more prosperous by 1982? Why?

What caused sharp upturns in the economies in India, Germany, China, New Zealand, South Korea, and Sri Lanka?

Human beings are going to make mistakes in any kind of economic system. The key question is: What kinds of incentives and constrains will force them to correct their own mistakes. In a price-coordinated economy, what forces producers to stop their inefficient use of resources?

Human beings are going to make mistakes in any kind of economic system. In a feudal economy or a socialist economy, leaders can continue to make the same mistakes indefinitely. According to the author, which of the following is the fundamental reason?

Some Soviet economists were aware of the role of prices from having seen what happened when prices were not allowed to perform that role. But economists were not in charge of the Soviet economy. Political leaders were. Under Stalin, what happened to many economists who said things he did not want to hear?

What made people count certain sands in Venezuela and Canada as oil reserves in the early twenty-first century?

According to the author, what is the fundamental reason why many people made false predictions that we were "running out" of various natural resources based on?

When there are local famines in Third World countries, what is not uncommon regarding food supplied by international agencies to the national government?

When automobiles began to displace horses and buggies, many manufacturers of saddles, horseshoes, and carriages were forced to shut down. In a sense, it is unfair because innovations were as unforeseen by most of the people who benefited as by most of the people who were made worse off. But creating more fairness to those producers would be also unfair to _____________ which include everyone.

Politicians, journalists, and academicians are almost continuously pointing out unmet needs in our society that should be supplied by some government program or other. Most of these are things that most of us wish our society had more of. What is wrong with that?

When there is a shortage of a product, there is always less of it either absolutely or relative to the number of consumers.

During and immediately after the Second World War, many Americans looking for an apartment had to spend weeks or months in an often futile search for a place to live, or else resorted to bribes to get landlords to move them to the top of waiting lists. Meanwhile, they doubled up with relatives, slept in garages or used other makeshift living arrangements, such as buying military surplus Quonset huts or old trolley cars to live in. All of these happened because:

When rent control ended after the war, the housing shortage:

In the normal course of events, people's demand for housing space changes over a lifetime. Their demand for space usually increases when they get married and have children. But years later, after the children have grown up and moved away, the parents' demand for space may decrease. These take place because:

Despite a severe housing shortage in New York, San Francisco, and other cities with rent control, a nationwide survey in 2003 found the vacancy rates in buildings used by business and industry to be nearly 12 percent, the highest in more than two decades. Why?

Under rent control in England and Wales, privately-built rental housing fell from being 61 percent of all housing in 1947 to being just 14 percent by 1977. A study of rent control in various countries concluded: "New investment in private unsubsidized rented housing is essentially nonexistent in all the European countries surveyed, except for luxury housing." Why was luxury housing an exception?

A policy intended to make housing affordable for the poor (i.e., rent control) has had the net effect of shifting resources away from the building of:

Numerous examples of rent control show us what is important when we analyze economic policies. What is it? Choose all that apply.

A study published in 2001 showed that more than one-fourth of the occupants of rent-controlled apartments in San Francisco had household incomes of ____________ a year.

Cities with strong rent control laws, such as New York and San Francisco, tend to end up with higher average rents than cities without rent control. Homelessness tends to be greater in cities with rent control. Why? Explain.

Scarcity and shortage mean the same thing in economics.

After more than half the city's housing supply was destroyed in just three days after the great San Francisco earthquake and fire in 1906,

Price controls almost invariably produce black markets where prices are not only higher than the legally permitted prices, but also higher than they would be in a free market. According to the author, why would the prices in black markets be higher than they would be in a free market?

During the early Soviet period, black markets for food: