Economics Question and Answers

1278 words 6 pages
Chapter 1: The Power of Markets
What are the two basic assumptions that economists make about individuals and firms?
Economists have two basic assumptions which keeps the economy in check. One is that people try to make themselves as versatile as possible maximizing their overall potential. The other is that a firm would do what it needs to make the most profit possible.
What is the role and significance of prices in the market economy? Prices in a market economy are very important. Price allows us to give out goods appropriately to those who are able to pay.
What’s so great about a market economy anyway?
Market economies are great for many reasons. A market economy makes our lives better through competition either through lowering
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Chapter 7: Financial Markets
Explain how get rich quick schemes violate the most basic principles of economics.
Get rich quick schemes don’t work most of the time because it violates a major economic principles. Economic principles have four requirements to make money: you need to raise money; you need to use the surplus money profitably; you need assurance against risk; and you need to be able to speculate. Get rich quick schemes bypass the first and third need.
What advice about the stock market did you find most useful and or interesting?
I feel like keeping open minded about advice is good. If i was to choose one piece of advise i believe was the most useful i would say it was diversify.
Chapter 8: The Power of Organized Interests
Why have mohair farmers earned a subsidy from the Federal Government for decades?
Mohair farmers earned a subsidy from the federal government for 35 years. This happened because politicians who had the Mohair farmers in there district essentially traded other politicians for support.
Chapter 9: Keeping Score
Why is a nation’s GDP a good measure of its economic well-being and progress?
A nation’s GDP is good for many things. It helps determine economic well being and progress through showing total economic prosperity by showing the GDP per capita.
Why is a nation’s GDP a poor measure of its economic well-being and progress?
GDP is not the best at showing economic well being because of many

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