Econ Alive! Ch. 3 & 4

The three fundamental economic questions are what to produce, ______________, and for whom.

• why

• how

• when

• where

Which of these economic goals is most important in a traditional economy?

• growth

• stability and security

• freedom

• efficiency

Why are economies most efficient when they have full employment?

• No one person has to work too hard.

• Wages are spent for consumer goods.

• Unemployment offices can be closed.

• No productive resources are left unused.

In the circular flow model, which of these is a factor payment?

• the monthly mortgage on a house

• the hourly wage a store pays to a clerk

• the check someone writes to buy groceries

• the credit card charge for ordering games online

Why did the Soviet Union experience many surpluses and shortfalls?

• The labor force was not well educated.

• The cold Russian climate made farming hard.

• Central planners could not manage every detail.

• The country depended on imports to obtain resources.

Which kind of economy is most common today?

• command

• market

• mixed

• traditional

What would government do in a model free enterprise system?

• ensure that prices remain resonable

• stay out of economic activity altogether

• protect property rights and enforce contracts.

• support entrepreneurs to encourage innovation

Which is the best example of specialization?

• A surf shop lowers the price on swimsuits.

• A dry cleaner spends extra time on grease spots.

• An assistant in a tailoring shop only replaces zippers.

• An online clothing outlet offers customized monograms.

How does division of labor increase productivity?

• Workers require minimal training.

• Workers can be paid a lower wage.

• Workers become expert at one task.

• Workers move often from job to job.

What is the main reason Americans specialize more today than the early pioneers did?

• We have more access to markets.

• We have more vocational training.

• We depend less on transportation.

• We live in less crowded conditions.