- Why are all goods and services scarce?

- Why are all goods and services scarce? a. Some goods have a greater opportunity cost than others b. All people have unlimited wants, but limited resources to satisfy those wants c. Some things are needs and others are wants d. Some people want to have more goods than others Economics Daily Ten #1 Explanation: scarcity is defined as unlimited wants given limited resources, no one can have an unlimited amount (time, rest, vacation, stuff, etc) of any given thing. Explanation: scarcity is defined as

Economics Daily Ten #2 • Study the graph below and use it to answer the following question. • The probable impact of corporate downsizing is a movement from • point X to • A. point M • B. point N • C. point O • D. point P Explanation: The PPF model shows the production possibilities between two goods. It is a visual illustration of opportunity cost.

Economics Daily Ten #3 • Study the model below and use it to answer the following question. • The entry of women into the American labor force during World War II was one • important reason for A. a shift from curve CD to point G B. a shift from curve EF to curve CD C. a movement from point Y to point Z D. a shift from curve CD to curve EF Explanation: Increases in population increase the work force and potential output of goods and services, making it possible to produce at a greater level.

- An economy where the three economic questions are based on decisions made by consumers and businesses, with limited government intervention is an example of a _____________ economic system. a. Market b. Mixed c. Traditional d. Command Economics Daily Ten #1 Explanation: (b) – mixed economies, such as the U.S., rely on supply and demand, with government playing the role of protector, overseer and regulator of the economy. Explanation:

- An efficient economy is one that Economics Daily Ten #2 a. Has very few people who do not work for a living b. Makes less use of all its goods and services c. Uses the factors of production wisely and not wastefully d. Makes the least costly use of it resources Explanation: (c) – efficiency is using resources wisely to produce goods and services Explanation:

- Fill in the blanks for each of the following: QB Peyton Manning’s high salary, vs. a cashier’s low salary, represents economic _________. Moving from the personal computer to handheld devices represents an economic _________. Today, Chevron will have gas is representative of economic ___________. GM receiving a government bailout represents economic ____________. Increasing the production of goods, services and jobs would represent economic ________. Word Bank: innovation, predictability, growth, security, equity. Economics Daily Ten #3 equity innovation predictability security growth

Economics Daily Ten #4 1. Why does a free market economy need some government intervention? a. so that the government has total control over factor resources b. to ensure the government has the freedom to tax as necessary c. to make sure that the government can fulfill its needs for goods and services d. to provide for things that the marketplace does not address (i.e. market failures) 2. In what kind of economy does the government make all the decisions? a. socialist b. laissez faire c. centrally planned, or command economy d. free enterprise Explanation: (d) – most modern economies are mixed, or have some government involvement to regulate, protect and oversee. Explanation: Explanation: (c) – command economies are controlled by a dictator, or small group of economic policy makers. Explanation:

Economics Daily Ten #5 1. What is the function of an economic system? a. to make sure all people have equal access to goods b. to organize and distribute scarce resources c. to give all producers the same access to consumers d. to make sure people are paid for their labor 2. You are an entrepreneur with an innovative idea for a new business. In which kind of economy would you have the most opportunity to try to achieve success? a. market economy b. command economy c. traditional economy d. economy of scale Explanation: (b) – an economic system is an organized way of providing goods and services to people in a society. Explanation: Explanation: (a) – a market economy would offer the greatest degree of economic freedom. Explanation:

Economics Daily Ten #6 • Study the model below and use it to answer the following question. The flow of goods and services to consumers is illustrated by A. 4 to 2 B. 8 to 6 C. 2 to 5 D. 6 to 1 Explain: Outer circles represent the flow of money, inner circles represent the flow of inputs and outputs.

Economics Daily Ten #7 1. The upper line of monetary flow, marked “1” shows the a. factor market b. product market c. supply and demand d. production possibilities frontier 2. The lower half, marked “2” represents the a. factor market b. product market c. supply and demand d. production possibilities frontier 3. Which of the following is not flowing from the household to the firm in the factor market? a. Land b. Labor c. Capital d. Goods

Economics Daily Ten #6 Properly label each component of the circular flow model, indicating the two markets, two entities and what is represented by each arrow. Business Revenue Consumer Spending Consumer Goods/Services Outputs Inputs Land, Labor, Capital Payments to Households Income to Households Explanation: the product market is where goods and services are exchanged. The households bring money, Firms bring goods + services. The factor market is where land, labor and capital are exchanged. Households own the F.O.P and firms buy from the households.

Economics Daily Ten #8 What is the purpose of competition? a. to create centralized control in the marketplace of one business b. to cause producers to attempt to put each other out of business c. to cause buyers and sellers to be generous about spending their money d. to act as a motivating force behind the free market Explanation: (d) – competition is at the heart of a capitalist economy; it motivates firms to improve their products and keep prices fair. Which describes the metaphor of the invisible hand? a. an economy where the 3 economic questions are answered by the government b. an economy where households and firms determine the market c. an economy where tradition, ritual and custom determine the factors of production d. a tangible force behind a modified free enterprise Explanation: (b) – Adam Smith’s Invisible Hand represents free market economic philosophy, with limited involvement by the government.

Economics Daily Ten #9 Buyers and sellers willingly engage in a transaction that benefits both parties because of which concept in economics? a. economic equity b. communism c. voluntary exchange d. property rights Explanation: (c) – voluntary exchange is the free trade of goods and services and the gains made from trade. One of the strongest incentives in the market economy is to make money, this is illustrated by the concept of a. property rights • b. profit motive • c. voluntary exchange d. division of labor Explanation: (b) – profit motive is the motivating factor behind every firm.

Economics Daily Ten # 10 Exposure to second hand smoke would be an example of a a. positive externality b. negative externality c. negative perspective d. positive incentive Explanation: (b) – externalities are a cost or benefit incurred by a party who did not agree to the action causing the cost or benefit. The primary way to improve productivity is a. reduced work ethic • b. negative incentives • c. improved technology d. removal of subsidies from the private sector Explanation: (a) – technology plays a major role in a society’s productivity and growth.

Economics Daily Ten # 11 Which of the following is a role of the government in a modified free enterprise? a. ensure that businesses follow certain environmental protection rules b. ensuring that business obtain market power and determine price fixing c. ensuring that the market is completely deregulated in order to allow competition to flourish d. To actively dismiss the public interest for the concerns of the firms Explanation: (a) – government plays the role of informer, protector and regulator of the U.S. economy The primary way to improve productivity is a. reduced work ethic • b. negative incentives • c. improved technology d. removal of subsidies from the private sector Explanation: (c) – technology plays a major role in a society’s productivity and growth.

Economics Daily Ten # 12 Someone who does not pay for a public good/service, but benefits from it is a a. free-loader b. free-rider c. free-person d. free-bird Explanation: (b) – a free-rider is someone who consumes more than their fair share of a public resource. A situation in which the market on its own does not distribute resources efficiently a. market externality • b. market production • c. market failure d. market deficit Explanation: (c) – market failures occur as a result of a breakdown in the allocation of scarce resources within a market style economy.

Economics Daily Ten #1 Price 1. Why is the demand curve downward sloping? a. Because of the positive relationship between p and qd. b. Because of the inverse relationship between price and qd. c. Because of the direct relationship between price and qd. d. Because of negative relationship between supply and demand. Quantity Demanded Explanation: (b) The Law of demand causes a downward sloping curve P Q P Q

Economics Daily Ten #2 1. Which of the following statements exhibit demand in economics? a. I love the new Infiniti G37. b. I want to travel to Europe next year, but I’m dead broke. c. I want to build a deck, so I’m saving the money and I’m going to buy it this summer. d. I really want to buy a new pair of UGGs, I have the money, but they are too expensive for me to buy. Explanation: (c) Demand is the desire, willingness and ability to consume a good or service.

Economics Daily Ten #3 Price 1. Which of the following is a true statement? a. P1 to P2 represents an increase in price and decrease in qd. b. P1 to P2 represents a shift in the demand curve. c. P1 to P2 represents a positive relationship between price and qd. d. P1 to P2 represents a drop in price and an increase in qd. P1 P2 Q1 Q2 Quantity Demanded Explanation: (d) Price falls, quantity demanded increases

Economics Daily Ten #4 Price • Study the model below and use it to answer the following question. D2 D1 Quantity Demanded Which situation would cause the shift of the demand curve to shift from D1 to D2? A – The economy is experiencing a recession and people’s overall income reduces. B – Prices drop for the item being analyzed on the graph. C – Population in the area analyzed by the graph increases by 80%. D – Prices increase for the item being analyzed on the graph. Explain: List Determinants of Demand: Explain: List Determinants of Demand: (c) Income, Tastes, Price of Related Products, Expectations, Number of Buyers

Economics Daily Ten #5 Test Your Understanding 1. In each of the following cases, state whether (1) there is a movement along the demand curve for American automobiles, (2) the demand curve for American automobiles will shift to the right, (3) the demand curve for American automobiles will shift to the left 1. The price of gasoline rises ________________________ 2. The price of American automobiles rises ________________________ 3. The price of Japanese automobiles rises ________________________ 4. Buyers' incomes fall ________________________ 5. Buyers find that American automobiles are of higher quality __________________ 6. Mexican automobile buyers are now able to buy American automobiles _____________________ 7. Buyers expect that the price of American automobiles will drop next year _____________________ 8. The price of American automobiles drop ____________________ (3) – Shift to the left (1) – Movement along (2) – Shift to the right (3) – Shift to the left (2) – Shift to the right (2) – Shift to the right (3) – Shift to the left (1) – Movement along Explanation: Price change of item - causes change in QD, movement along curve Change in determinant - causes change in D, shift in curve

Economics Daily Ten # 6 Ceteris Paribus means a. all things changing b. all things remaining constant c. all things constantly changing d. all things remaining changed Explanation: (b) – The demand curve remains fixed Ceteris Paribus (all other things constant). A change in the price of an item being analyzed causes (2 answers apply) a. a shift in the demand curve • b. a change in quantity demanded • c. a change in supply d. a change in demand e. movement along the demand curve Explanation: (b and e) – price (of an item in study) does not change “demand”.

Economics Daily Ten # 7 Inelastic Time Horizon Complete the following chart: Elastic Availability of Substitutes Necessity vs. Luxury/Relative Importance Elastic Necessity vs. Luxury/Relative Importance Inelastic Explanation: Elasticity of demand reflects the change in qd when there is a change in price. Calculate the following using the midpoint method. 300 Q2 – Q1__ ________ (Q2 + Q1)/2 = ____________ = ______ = ______ P2 – P1__ ________ (P2 + P1)/2 1.2 1.4 250 30 .86 35 Elastic or Inelastic ___________ Elastic

Economics Daily Ten # 8 Elastic Time Horizon Complete the following chart: Definition of the Market/Necessity vs. Luxury Inelastic Elastic Definition of the Market Inelastic Necessity vs. Luxury Calculate the following using the midpoint method. 40 Q2 – Q1__ ________ (Q2 + Q1)/2 = ____________ = ______ = ______ P2 – P1__ ________ (P2 + P1)/2 .5 .75 80 5 .67 7.5 Elastic or Inelastic ___________ Inelastic

Economics Daily Ten #1 Price Price P QS P QS S1 S2 Quantity Supplied Quantity Supplied 1. Why is the supply curve upward sloping? a. Because of the positive relationship between p and qd. b. Because of the inverse relationship between price and qd. c. Because of the direct relationship between price and qs. d. Because of negative relationship between supply and demand. 2. Which of the following could cause a shift in the supply curve? a. The government places an excise tax on the suppliers of the product. b. The price of the good goes up because demand for the good increases. c. The number of sellers reduces. d. The government provides an incentive to produce through increased subsidies. Explanation: 1. (c) Law of supply causes an upward sloping curve. 2. (d) Determinants cause a shift; effects of rising costs, technology, subsidies, taxes, regulation, future expectation of price, number of sellers.

Economics Daily Ten #2 • Study the model below and use it to answer the following question. QS – QD 20 – 80 = - 60 1. What is the Pe and Qe respectively at the equilibrium point? 2. At $3 there would be a _____ of _____ quantity. 50, 6 6, 50 5, 60 60, 5 Shortage, 50 Shortage, 60 Surplus, 50 Surplus, 60 Explanation: 2. (b) Shortage below Eq, Surplus above Eq. Explanation: 1. (b) Equilibrium, QS = QD

Economics Daily Ten #3 • Suppose we are analyzing the market for summer clothing. Using a correctly labeled graph, illustrate the impact the scenario following would have on demand or supply. • Winter starts and the weather turns sharply colder. • Include on your graph: • Supply curve • Demand curve • Price Equilibrium (Pe) • Quantity Equilibrium (Qe) • Shift and effect on Pe and Qe S D

Economics Daily Ten #4 • Suppose we are analyzing the current market for oil. As a result of unrest in Libya, the world’s 2nd leading supplier of oil, there is a supply shock and a reduction of oil in the global market. • Using a correctly labeled graph, illustrate the impact the scenario would have on demand or supply. • Answer the following questions: • Which curve will be affected? • What will happen to the equilibrium price? • What will happen to the equilibrium quantity? Supply Rise, go up Fall, go down S D

Economics Daily Ten #5 • Study the model below and use it to answer the following question. Suppose the government set a binding price ceiling at $2. What would be the quantity demanded and the quantity supplied? ______________ In this case the price ceiling is ______ the equilibrium point. There would be a shortage/surplus of ______ QD = 40 QS = 20 below Shortage - 20 Explain: Price ceiling is a legal maximum price that can be charged for a good or service. Price ceilings can cause a shortage in the market and affect market equilibrium.

Economics Daily Ten #6 • Which of the following would most likely be fixed costs for a firm? • Salaried workers (someone that is paid a monthly amount based on an annual salary, ie. $50,000) • Lease on the building (paid monthly spread out over 10, 20, 30 years, etc.) • Hourly workers (someone that is paid by the hour, i.e. $13.00 an hour) • Electricity (cost to power a building, office, etc.) Explanation: (a, b) fixed costs do not change based on production. • 2. Which of the following would most likely be variable costs for a firm? • Salaried workers • Lease on the building • Hourly workers • Electricity Explanation: (c, d) variable costs change based on production.

Economics Daily Ten #4 • Study the model below and use it to answer the following question. Of the following, which situation would cause the shift of the supply curve from S1 to S2? The government reduces subsidies to wheat farmers. New fertilizers increase wheat crop yields. Firms exit the wheat industry. Drought reduces industry output by 25%. Explanation: (b) Technology, prices reduced, quantity increased

Economics Daily Ten #1 1. Which of the following sets are arranged from most competitive to least competitive? a. absolute competition, monopolistic competition, imperfect competition b. perfect competition, oligopoly, monopolistic competition, monopoly c. perfect competition, monopolistic competition, oligopoly, monopoly d. oligopoly, perfect competition, monopolistic competition, monopoly e. absolute competition, imperfect competition, monopolistic competition, monopoly Explanation: (c) Perfect competition – many sellers, no distinction between productsMonopolistic competition – many sellers, similar but different products Oligopoly – few sellers dominate a market Monopoly – one seller dominates a market and controls price • Which of the following would most likely serve as an example of a monopoly? • a. a bakery in a large city • b. a bank in a large city • c. a local cable television company • d. a small group of corn farmers • e. the auto industry Explanation: (c) Cable companies are authorized to monopolize a region by way of governmental regulation.

Economics Daily Ten #2 1. Price discrimination occurs when one company a. offers the same price b. offers one price to one individual and another price to another individual c. offer a price set by a government price ceiling d. offers a price set by a government price floor • When a firm tries to distinguish its product on the basis of service level, location, physical characteristics and advertising, it is considered • Price discrimination • Price competition • Nonprice competition • Market power • Pure competition

Economics Daily Ten #3 Monopolistic competition Describe the following as monopolistic competition or oligopolies. • Fast food companies • Video game systems • Ice cream companies • Cable sports channels Oligopoly Monopolistic competition Oligopoly • Which of the four forms of nonprice competition, pgs. 167-168, would reflect the following? • A new shape for a bottle of coke • In-home doctor visits • Ralph Lauren vs. Wal-mart brand clothing • A fast food restaurant near I-95 Physical Characteristics Service Level Advertising, Image, or Status Location

Economics Daily Ten #4 Corporation Characterize the following as sole proprietor, partnership or corporation. • Google, inc. • Cohen and Cohen Law Firm • John Doe’s Island Landscaping Partnership Sole Proprietor • Which of the following is not an advantage of a sole proprietorship? • Easy to start up • Sole receiver of profit • Full control of decision-making • Unlimited personal liability • Relatively few regulations Explanation: (d) Sole proprietors are personally liable for debt and lawsuits from injury.

Economics Daily Ten #5 • Which of the following two are not advantages of a partnership? • Easy to start up • Shared decision making and specialization • Larger pool of capital • Potential for conflict • Unlimited liability Explanation: (d/e) Partnerships have unlimited liability, there is a potential for conflict because of differing perspectives. • Which of the following two are not advantages of a corporation? • Limited liability • More potential for growth • Double taxation • Loss of control • Long life Explanation: (c/d) Corporations must pay taxes on income and dividends; original owners must give up control to board of directors.

Economics Daily Ten #1 1. Classify the following components of GDP Dell opens a new factory in Seattle, WA. _______________________ Congress approves the purchase of a new fleet of Boeing Jets. ______________________ A family buys a new Honda Accord. __________________________ China imports soybean from the U.S. _________________________ Investment (I) Government (G) Consumption (C) Net Exports (NX) 2. All of the following are accurate regarding the definition of GDP EXCEPT The market value Of all final goods and services Produced by a country’s companies, domestically and abroad In a given period of time Explanation: (c) GDP measures only that which is produced domestically, within a country’s borders.

Economics Daily Ten #2 1. Complete the following in order to classify the stages of the business cycle Peak Expansion Recovery Contraction Recession Trough 2. Two quarters of economic decline is known as a ______ Trough Recession Depression Recovery

Economics Daily Ten #3 Use the first table to fill in the information, including population. 1. Describe how population might affect GDP. 2. What does Per Capita GDP tell you about a country's economy and standard of living? 4. Based on the table above, which country has the highest standard of living? The lowest? 5. Why are the citizens of the countries with high Per Capita GDP more likely to have a better quality of life than other countries?

Economics Daily Ten #3 $29, 892 2 1 $3,427 1 10 $24,458 5 2 $21,199 7 5 $22,789 3 9 $21,028 8 6 $6,125 3 8 $7,045 6 7 $4,712 4 9 10 4 $21,447 Use the first table to fill in the information, including population. 1. Describe how population might affect GDP. 2. What does Per Capita GDP tell you about a country's economy and standard of living? 3. Based on the table above, which country has the highest standard of living? The lowest? 4. Why are the citizens of the countries with high Per Capita GDP more likely to have a better quality of life than other countries? In general, the larger the population, the larger the gdp. Larger population can reduce per capita gdp. The higher the per capita gdp, the higher the standard of living. United States, China Positive Externalities, people benefit from the “spillover” of social benefits created by the pursuit of self-interest.

Economics Daily Ten #4 • What would you conclude about an economy characterized by increasing real gross domestic product (GDP), low unemployment? • This economy is in a slowdown. • The government needs to address the unemployment problem. • This economy is in the expansion phase of a business cycle. • This economy is in the trough phase of a business cycle. • The amount of goods and services each individual worker can generate on average in a given year is measured by • Productivity • Capital gains • Capital deepening • Natural resources

Economics Daily Ten #1 1. The BEST example of structural unemployment in an economy is someone between jobs or entering the work force out of work due to a change in the business cycle out of work due to a seasonal downturn in business whose job skills do not match the economy’s needs whose job skills do not match the economy’s needs • What range of the unemployment rate would indicate that an economy is in the peak of its business cycle? • 4-6% • 7-8% • 10-12% • Unemployment is not an economic indicator • 4-6%

Economics Daily Ten #2 • Determine the unemployment rate based on the following information: Unemployed: 8.5 million Labor Force: 190 million • Determine the CPI for 2010 based on the following information: Market Basket 2010: $3907.56 1982-1984 Market basket: $1792.00 • Determine the inflation rate from 2009 to 2010 based on the following information: CPI 2010 = use answer from above CPI 2009 = 214.5 8.5/190 = .0447 X 100 = 4.5% 3907.56/1792 = 2.18056 x 100 = 218.1 218.1 – 214.5 = 3.6 3.6/214.5 = .0167 x 100 = 1.67%

Economics Daily Ten #1 • List the function that each of the following serves: • Money can earn interest in the bank. • Money can buy things. • Money is a way to keep track of debts/investments. Store of Value Medium of Exchange Unit of Account List the following in order from most liquid to least: House, car, checking account, savings account. Checking account, savings account, car, house

Economics Daily Ten #2 • Which of the following is responsible for the control of the money supply? • the United States Treasury • the Federal Reserve System • the Federal Deposit Insurance Corporation • the Comptroller of the Currency • the Federal Reserve System • When the Federal Reserve buys government securities (bonds) on the open market, what effect does this action have on the nation’s money supply? • Money Supply • increases • falls • stays the same • decreases • increases

- Why are all goods and services scarce?