eco test 1 - Derek Johnson ECO 101 February 27, 2007 Quiz...

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Derek Johnson ECO 101 February 27, 2007 Quiz #1 5) Yes, I agree with the economic theory, “Supply creates its own demand.” If companies were not providing the world with products then there would not be anything for the public to want. But since there is competition between companies and new and better products coming out all the time, it makes people want to buy these things creating a bigger demand. The downfall to this is if spenders do not spend then there is not any demand so the companies are losing money by producing more than they are selling. This may create inflation because the company may start to charge less for their product, hoping people will buy it if it is cheaper. Then, when they get the demand back, they will raise their price more until they are forced to do this whole cycle over again. This proves that supply creates its own demand because people cannot want or demand something if it is not being provided. 8) Capitalism is an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth. Communism is a theory or system of social organization based on the holding of all property in common, actual ownership being ascribed to the community as a whole or to the state. The difference between capitalism and communism is that capitalism allows you to make your own decisions and not have someone demanding you what to do. Communism you are forced to do everything by a leader. That leader has the right to do whatever he wants to whoever he wants. A capitalist economy has been
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proven to be better for the country. A communist economy has been proven to lead to wars within the country and has lead to revolutions within the country. 9) Consumers buy products in larger quantities for many reasons. First of all it makes more sense to buy things in bulk. One it is easier then having to go to the store every other day to buy paper towels. Two it is cheaper to buy things in bulk. For instance my friend’s parents order toilet paper by the boxes because it is cheaper. Not buying in large quantities is just silly you wouldn’t be helping your wallet if you don’t buy in large quantities. Buying small quantities does not make sense. I understand that it may be easier but it is way more money. Sure buying large quantities can be a pain since only certain stores accommodate for that like Costco and BJ’s but if you do make the trip it will be worth it in the long run. When I have to go and buy groceries or supplies I will be buying in large quantities. When places sell value packs of the products you pay less money for more of the product. Who wouldn’t want to do that? 10) Rent controls are when price controls are set on residential housing. They are also
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eco test 1 - Derek Johnson ECO 101 February 27, 2007 Quiz...

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