FREE Associate of Arts: Economics Theories Questions and Answers
What is the term used to describe the combined physical and mental exertion applied to create goods and services?
The term used to describe the combined physical and mental effort applied to produce goods and services is "labor." It encompasses the work and skills contributed by individuals in the production process.
Which statement would align with the views of Adam Smith?
Laissez-faire is an economic philosophy that advocates for minimal government intervention in the economy, allowing markets to operate freely and individuals to pursue their self-interest. Adam Smith, often regarded as the father of economics, strongly believed in the idea of free markets and limited government interference as the best way to achieve economic prosperity and growth.
In Economics, what term refers to the amount or volume of a product or service that is accessible for purchase?
The term that refers to the amount or volume of a product or service that is accessible for purchase in Economics is "Demand." It represents the quantity of a good or service that consumers are willing and able to buy at a given price and time.
What concept is most commonly linked to laissez-faire economics?
The concept that is most commonly associated with laissez-faire economics is "free trade." Laissez-faire economics advocates for minimal government interference in the economy and emphasizes the importance of unrestricted trade between nations, allowing market forces to determine prices and allocate resources.
What does the concept of "supply" represent in Economics?
The concept of "supply" in Economics refers to the quantity or amount of a product or service that is available for purchase in the market. It represents the total quantity of goods or services that producers are willing and able to offer for sale at a given price and time.
What are the two fundamental principles or laws of economics identified by Smith?
The two fundamental principles or laws of economics identified by Smith are the Law of Supply and Demand and the Law of Competition. These principles highlight the interplay between the availability of goods and services in the market (supply) and the desire of consumers to purchase them (demand), as well as the impact of competition among producers in shaping prices and driving economic efficiency.
What occurs to the price when the quantity of a good available exceeds the demand for it?
When the quantity of a good available exceeds the demand for it, the price tends to go down. This is because sellers may reduce prices to encourage more purchases and clear their excess inventory.
How does the iron law of wages explain the impact of population growth on wages?
The iron law of wages posits that when there is a surplus of population, it results in a decrease in wages. As the number of people seeking jobs exceeds the available employment opportunities, the demand for labor decreases, leading to lower wages for workers.
Who are the individuals that make purchases of a product?
The individuals who make purchases of a product are called consumers. They are the end-users of goods or services, acquiring them for personal use or consumption. The term "consumers" is the correct answer as it represents the group of people directly involved in buying and using products in the market.
What is the term for money that is utilized to generate more money, typically invested in a business or income-generating ventures?
Capital refers to money that is used to generate additional wealth or income through investment in businesses or income-generating ventures. It plays a crucial role in the economy by fueling economic growth and development.
What term is used to describe human activities that involve the creation, distribution, and utilization of goods and services?
The term used to describe human activities related to the creation, distribution, and utilization of goods and services is "economy." It encompasses the overall system of production, trade, and consumption that drives the flow of resources and goods within a society or country.
What was the main emphasis in Adam Smith's "Wealth of Nations"?
The main emphasis in Adam Smith's "Wealth of Nations" was on the concept of supply and demand. Smith argued that in a free market economy, the forces of supply and demand would naturally regulate prices and allocate resources efficiently without the need for government intervention. This idea laid the foundation for modern economic theory and is a key principle in classical economics.
What does the term "Malthusian catastrophe" refer to?
The term "Malthusian catastrophe" refers to a situation where the population of a region or the world surpasses the available food supply, leading to widespread famine and suffering. In this scenario, the population growth outpaces the resources needed to sustain it, causing a significant imbalance between the number of people and the available means of subsistence.
In what ways do the economic theories of Thomas Malthus and David Ricardo exhibit similarities?
The economic theories of Thomas Malthus and David Ricardo shared a common view that the condition of the working class would inevitably face challenges and hardships. They believed in the idea that certain economic forces and principles would lead to the inevitable struggles of the working class, although their specific theories and explanations differed.
What is the economic concept that relates to the interplay of supply and demand and is influenced by price? When the price of a product or service increases, the demand for it decreases, and conversely, if a product or service becomes scarce, people are willing to pay more for it.
Supply and Demand is the economic concept that describes the relationship between the availability of a product or service (supply) and the desire or need for it (demand). It dictates that when the price of a product or service increases, the demand for it decreases, and when a product or service becomes scarce, people are willing to pay more for it. This fundamental principle plays a crucial role in determining prices and market equilibrium in various economic systems.
Who is the individual credited with establishing and developing the principles of capitalism?
He is widely regarded as the founder and creator of capitalism, as outlined in his seminal work "The Wealth of Nations." Smith's ideas on free markets, the role of self-interest, and the importance of supply and demand laid the foundation for modern capitalist economic theory.