Ch. 16, Lessons 1 & 2
Expenses that change depending on how much a business produces are called __________________.
variable costs
What are the three basic economic questions in a market economy?
1. What to produce?
2. How to produce?
3. For whom to produce?
Of all the goods and services in the world, about how much does the United States produce?
one-fifth
Who makes most of the economic decisions in the United States?
citizens
What is the term for goods purchased from another country?
imports
Which type of resource is a factory building?
capital resource
The government/government planners
What is the term for people who take risks to start new businesses or introduce new products?
entrepreneurs
Economists refer to the activity that takes place in the markets as __________________________.
Voluntary exchange
When the value of a country's exports is greater than the value of its imports, the country has a _______________________.
trade surplus
What technique do businesses utilize when making decisions among various projects?
benefit-cost (or cost-benefit) analysis
The point where supply and demand curves meet is __________________________.
the equilibrium price
Where do people sell their labor?
The two forces in a free enterprise system that decide what producers will produce and what consumers will purchase are _____________ and _____________.
supply and demand
Countries that are growing economic powers who have not yet reached the level of output of developed countries are called ________________________________.
newly industrialized countries
The additional income received from each increase of one unit in sales is called the __________________?
marginal revenue
What is one factor that affects demand?
Possible answers include:
- number of consumers
- consumers' income
- consumers' preferences
Where do exchanges of goods and services take place in the circular flow?
product market
Who argued that the best way for society to advance was for people to work for their own self-interest?
Adam Smith
The process of changing state-owned businesses into ones owned by private citizens is called _________________.
Privatization
The cost of the next-best use of your money or time when you choose to do one thing rather than another is known as _________________________.
opportunity cost
What happens when the quantity demanded of a product is greater than the quantity supplied?
A shortage occurs
Which of the following would not be included in GDP?
1. Purchase of a new car
2. A haircut by a professional stylist
3. Sale of intermediate goods
4. Hiring a landscaper to do work at my house
Sale of intermediate goods
The incentive that drives the U.S. economy is the ________________________.
Profit Motive
Which protectionist mechanism places a limit on the amount of a particular good that can enter the country?
a quota