Economic Development and Trade Factors

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Questions and Answers

What does scarcity refer to in economics?

The decline of demand for certain products

The surplus of goods in the market

The unlimited resources available for consumption

The limited resources available to meet unlimited needs (correct)

What is the relationship between supply and price?

Supply decreases as prices decrease

Supply remains constant regardless of price changes

Higher prices lead to increased supply (correct)

As supply decreases, price increases (correct)

How is market price determined?

By the point at which supply and demand meet (correct)

Through government regulation

By consumer preferences only

Based solely on production costs

What does economics study primarily?

How to allocate limited resources to satisfy unlimited wants Signup and view all the answers

What is the result of a change in demand while supply remains constant?

An increase in market price Signup and view all the answers

Which of the following statements about inflation is true?

Inflation indicates a general increase in prices over time Signup and view all the answers

In what scenario might a decrease in supply occur?

Natural disasters affecting production Signup and view all the answers

What role do consumers play in the pricing of goods?

Their willingness to pay helps to establish the demand Signup and view all the answers

What characterizes less-developed countries in terms of technology?

Limited technology use Signup and view all the answers

Which type of economic development features high literacy levels?

Industrialized country Signup and view all the answers

What defines a developing country?

Improving literacy and technology Signup and view all the answers

Which statement about absolute advantage is true?

It allows countries to produce at a lower cost than others Signup and view all the answers

How is comparative advantage defined?

By a country’s efficiency in producing goods Signup and view all the answers

Which factor is NOT a characteristic of less-developed countries?

High industrial output Signup and view all the answers

What is common between developing countries and less-developed countries?

High levels of agricultural dependency Signup and view all the answers

Which of the following statements is true about levels of economic development?

Industrialized countries have a decreasing reliance on agriculture. Signup and view all the answers

What are natural resources primarily derived from?

The earth, water, and air Signup and view all the answers

Which of the following best defines human resources?

People who work to create goods and services Signup and view all the answers

What are capital resources considered to be?

Money and equipment used in production Signup and view all the answers

Which of the following statements about natural resources is incorrect?

They are solely defined as financial investments. Signup and view all the answers

What impact has technology had on human resources?

It has created new types of work while eliminating some tasks. Signup and view all the answers

Which of the following is NOT considered a capital resource?

Workers assembling products Signup and view all the answers

Which of the following examples best illustrates a natural resource?

Gold mined from the earth Signup and view all the answers

Which of the following correctly categorizes capital resources?

They are usually expensive and used over several years. Signup and view all the answers

Study Notes

Development Factors

Key factors affecting development include literacy levels, technology availability, and agricultural dependency.

Types of Development

Countries can be categorized as industrialized, developing, or less-developed based on their economic and social development.

Levels of Economic Development

Less-developed countries exhibit:
- Low literacy rates.
- Limited and basic technology.
- Economies based mainly on agriculture or mining.
Developing countries are characterized by:
- Improving literacy rates.
- Transitional technology use.
- Decreasing dependency on agriculture or mining.
Industrialized countries have:
- High literacy rates.
- Advanced and modern technology.
- Established industrial economies.

Economics of Foreign Trade

Absolute advantage: A country’s ability to produce a good or service at a lower cost than others.
Comparative advantage: A country’s ability to produce a good or service more efficiently than other nations.

Basic Economic Problem

Scarcity: Refers to the limitations of resources in meeting unlimited wants and needs.
Economics studies how individuals and societies choose to allocate limited resources to fulfill unlimited desires.

Making Economic Decisions

Addressing scarcity requires making informed choices and prioritizing needs.

Decision-Making Process

Involves evaluating options and potential outcomes to arrive at the best course of action.

Price-Setting Activities

Supply: The quantity of a good or service businesses are willing to offer at different prices.
Demand: The quantity consumers are ready to purchase at varying prices.
Market price is determined at the intersection point of supply and demand.

Inflation

Associated with rising prices over time, impacting the purchasing power of currency.

Economic Resources Satisfy Needs

Three main types of economic resources: natural, human, and capital resources.

Natural Resources

Also referred to as land, these are raw materials derived from the earth, water, and air.
Examples include iron ore, gold, agricultural products, rivers, and oxygen used in producing goods and services.

Human Resources

Known as labor, these resources consist of people contributing to the creation of goods and services.
Technology advancements may replace certain jobs, but new job opportunities arise simultaneously.

Capital Resources

These include physical assets like buildings, machinery, equipment, and money utilized in production.
Often expensive and utilized over extended periods by businesses.

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Description

This quiz explores key factors influencing economic development, including literacy levels, technology, and agricultural dependency. It categorizes countries into industrialized, developing, and less-developed. Additionally, the concepts of absolute and comparative advantage in foreign trade are discussed.