Question 1

An economist is examining how consumers in the automobile market have responded to recent price increases by car manufacturers. He is examining a microeconomic situation.

Accepted Answer

Microeconomics examines the economic behavior of consumers and organizations in particular markets.

Question 2

Studies about the effects of population growth on the economy are part of macroeconomics.

Accepted Answer

Macroeconomics looks at the operation of a nation's economy as a whole. This includes population growth/decline.

Question 3

Economic progress can occur when business owners provide jobs and economic growth for their employees, their communities, and themselves.

Accepted Answer

Economic progress is often driven by businesses that create jobs, generate income, and contribute to their local economies. This cycle helps to increase productivity, spur innovation, and create opportunities for growth and development for individuals, businesses, and communities.

Question 4

Peace and prosperity will flourish if we can find the one best way to divide existing resources among nations.

Accepted Answer

While finding the best way to divide resources might contribute to some level of peace and prosperity, there are many other factors that also play a significant role in achieving these goals. For example, issues such as conflict resolution, good governance, and economic development are all important components of creating a stable and prosperous global community. Additionally, the complex nature of resource distribution and the competing interests of various nations make it unlikely that there is a single "best" way to divide resources that would satisfy everyone.

Question 5

Resource development is the study of how to increase resources and to create the conditions that will make better use of those resources.

Accepted Answer

Resource development is indeed the study of increasing resources and optimizing their use.

Question 6

Resource development is concerned with finding the best way to utilize the fixed amount of resources a society has available.

Accepted Answer

The answer of Resource development is concerned with finding the...

Question 7

According to Adam Smith, the "invisible hand" refers to the government's effort to always keep a check on the wealth creation of individuals, so that no one business could control a market for a particular good or service.

Accepted Answer

This statement is not accurate. In fact, Adam Smith's concept of the "invisible hand" refers to the idea that in a free market economy, individuals pursuing their own self-interest will end up benefiting society as a whole, even though they did not intend to do so. The government's role is to ensure fair competition and prevent monopolies, but the "invisible hand" operates independently of government intervention.

Question 8

Economists study how people use resources to produce and distribute goods and services for consumption among competing groups and individuals.

Accepted Answer

This is a correct definition of what economists study.

Question 9

Microeconomics is the economic perspective that looks at the operation of a nation's economy as a whole.

Accepted Answer

Microeconomics is the economic perspective that focuses on individual markets, industries, and businesses, while macroeconomics looks at the economy as a whole.

Question 10

The study of how society chooses to employ resources to produce goods and services and to distribute them for consumption among various competing groups and individuals is known as demographics.

Accepted Answer

The study described in the statement is actually economics, not demographics. Demographics refers to the statistical characteristics of human populations, such as age, gender, race, and income.

Question 11

Global economics and politics have significant influence on businesses in the United States.

Accepted Answer

Global economics and politics can lead to changes in trade policies, currency exchange rates, and geopolitical relationships, which in turn affect businesses in the United States. For example, tariffs on imports could increase the cost of goods for US businesses, while changes in foreign investment laws could impact their ability to enter international markets. Additionally, changes in political stability or security threats in certain countries can impact supply chains and operations for US businesses with global operations.

Question 12

Thomas Malthus believed that overpopulation was a major cause of poverty.

Accepted Answer

Malthus argued that population growth would outstrip food production, leading to poverty and suffering.

Question 13

Thomas Malthus believed that people in most countries would never be able to achieve high standards of living unless the problems of overpopulation were addressed.

Accepted Answer

Thomas Malthus viewed rapid population growth as a major problem that would prevent standards of living from rising above subsistence levels.

Question 14

Microeconomics focuses on the decisions and behavior of people and organizations in particular markets.

Accepted Answer

Microeconomics is the branch of economics that analyzes the individual behavior and decision-making of firms and households in specific markets.

Question 15

Economist Adam Smith's important contribution was an inquiry as to why some nations are wealthy, while others remain poor.

Accepted Answer

Adam Smith's book "The Wealth of Nations" sought to explain the differences in economic success between nations and provided insights into the importance of free markets, specialization, and division of labor.

Question 16

In developing nations of the world, population has leveled off and is not expected to increase dramatically in the future.

Accepted Answer

Population in developing nations is still expected to increase in the future, although at a slower rate than in the past.

Question 17

The "invisible hand" in Adam Smith's theory turns self-directed gain into social and economic benefits for all.

Accepted Answer

Adam Smith believed that individuals pursuing their own self-interest in the market would ultimately lead to the greatest benefit for society as a whole. This concept is referred to as the "invisible hand." As individuals seek to maximize their own profits, they are incentivized to provide goods and services that others want, leading to increased competition and innovation, ultimately resulting in overall economic growth and higher living standards for all.

Question 18

Macroeconomics looks at long-run economic problems while microeconomics examines short-run economic problems.

Accepted Answer

The key distinction between macroeconomics and microeconomics is that macroeconomics is concerned with the performance of the economy as a whole while microeconomics is concerned with the behavior of people and organizations in particular markets.

Question 19

Adam Smith believed the self-interest of businesspeople would lead them to create needed goods, services, and jobs.

Accepted Answer

This is often referred to as the "invisible hand" concept in which individuals pursuing their own self-interest inadvertently benefit society as a whole.

Question 20

America's business success is largely due to an economic and social climate that allows businesses to operate freely.

Accepted Answer

America has a capitalist economy that emphasizes free market principles and limited government intervention. This allows businesses to operate with few restrictions, promoting innovation and competition. Additionally, America's social and cultural values prioritize entrepreneurship and risk-taking, which encourages business growth and development.

Quiz 2: Understanding Economics and How It Affects Business