Exam 1: Ten Lessons From Economics

The historical rise in living standards of Australian workers is primarily a result of:

Both Japan and the Philippines were badly damaged by the Second World War. Wages in Japan however, quickly overtook that of the Philippines in the post-war period. What is the fundamental cause of this difference?

Economics is defined as the study of:

Efficiency means that:

A market economy rewards people according to their ability to produce things that other people are willing to pay for.

When the government prevents prices from adjusting naturally to supply and demand:

Define opportunity cost. What is the opportunity cost of a forestry company planting an area with seedlings?

An equitable outcome is one where:

In his book The Wealth of Nations, Adam Smith observed that households and firms interacting in markets are led by an 'invisible hand' to make decisions that produce desirable outcomes for society.

What does the adage 'There is no such thing as a free lunch' mean?

Productivity is defined as the:

The two best reasons for a government to intervene in a market are to:

One trade-off that society faces is between efficiency and equity. Define each term and explain this trade-off.

The central concept of economics is:

One advantage market economies have over central planning is that market economies:

In order for scarcity to exist, it must be that:

Trade can benefit a family:

When the government redistributes income from the rich to the poor, society benefits since there are more poor than rich.

If the government prints too much money, it will cause inflation.

What benefits can a family realise by choosing to trade instead of being self-sufficient?