The study of how people choose to use scarce resources to satisfy unlimited wants is called

Transcription

1 Final Exam Review

2 The study of how people choose to use scarce resources to satisfy unlimited wants is called

3 Economics

4 The benefit gained from the use of a good or services is called

5 The benefit gained from the use of a good or services is called Utility

6 The value of what you have to give up in order to make a decision is called

7 Opportunity cost

8 Name 2 needs and 2 wants

9 Needs: food, shelter, clothing, water, etc Wants: ipod, vacation, dinners out, etc

10 Into what 4 categories do economists divide the factors of production?

11 Land, labor, capital, entrepreneurship

12 What does, There is no such thing as a free lunch?

13 Everything costs something

14 Which term explains economics as it is, not as it should be?

15 Positive economics

16 What is the basic economic problem?

17 Scarcity

18 With voluntary exchange, who benefits?

19 Both the buyer and the seller

20 In the market economy, the real power is held by which group of people?

21 Consumers

22 What does privatization mean?

23 Moving from government (public) ownership to private ownership.

24 The situation where women tend crops and raise children while men hunt is often found in what type of economy?

25 Traditional economy

26 Government deciding the distribution of all resources is a feature of what type of economy?

27 Command

28 An economic system in which people have free will to participate in the market as they choose is called

29 Market economy

30 What does laissez faire mean?

31 Hands off, keep govt out of the market

32 What is the producer s goal in the market?

33 Earn a profit

34 How are public goods funded?

35 Taxes (collected by government)

36 An externality is a side effect of a transaction that affects whom?

37 Someone other than the buyer and seller

38 Give an example of a positive externality.

39 Education, flu shots

40 Give an example of a negative externality.

41 Pollution, second-hand smoke

42 What 2 factors are necessary for demand? (What is the definition of demand?)

43 The desire for the good and the ability to pay for it.

44 What is the law of demand?

45 As price increases, quantity demanded decreases, as price decreases, quantity demanded increases.

46 An actress sets off a craze for wearing camouflage clothing among her fans. What factor is affecting demand?

47 Consumer taste

48 Which economic concept is defined as the measure of how responsive consumers are to price change?

49 Elasticity of demand

50 What does an inelastic demand curve look like?

51 A steep slope

52 Name a product that would likely have inelastic demand?

53 Gas, cigarettes, drugs

54 What is the definition of supply?

55 The willingness and ability of a producer to produce a good.

56 What is the law of supply?

57 As price goes up, quantity supplied goes up. As price goes down, quantity supplied goes down.

58 The ease of changing production to respond to price changes determines what?

59 Elasticity of supply

60 Why would suppliers reduce the price of their product?

61 They have a surplus of the good.

62 How is equilibrium price found?

63 When QS=QD

64 What do high prices motivate potential producers to do?

65 Enter the market

66 What is the relationship between peanut butter and jelly?

67 They are complimentary goods.

68 The maximum amount that sellers may charge for a good or service is called

69 Price ceiling

70 Supply falls What happens to equilibrium price and quantity when

71 Supply falls P goes up, Q goes down What happens to equilibrium price and quantity when

72 Demand falls What happens to equilibrium price and quantity when

73 Demand falls P falls, Q falls What happens to equilibrium price and quantity when

74 Demand increases? What happens to equilibrium price and quantity when

75 Demand increases? Both P and Q increase What happens to equilibrium price and quantity when

76 Supply increases What happens to equilibrium price and quantity when

77 Supply increases Q increases, P decreases What happens to equilibrium price and quantity when

78 A person who does not pay for a service but benefits from it is called a(n)

79 A person who does not pay for a service but benefits from it is called a(n) Free rider

80 What do high prices motivate consumers to do?

81 Buy less

82 Agricultural products, such as wheat and corn, are examples of differentiated or standardized products?

83 Standardized

84 A market structure in which only one seller sells a product for which there are no close substitutes is called a

85 Monopoly

86 A monopoly in which the costs of production are lowest when only one firm provides output is called a

87 Natural monopoly

88 A monopoly that exists because a firm controls an invention is called a

89 Technological monopoly

90 With monopolistic competition there are how many buyers and sellers?

91 Many of each

92 The only gas station within a radius of 200 miles has a

93 Geographic monopoly

94 Few sellers and many buyers is characteristic of what type of market structure?

95 Oligopoly

96 The knowledge and skill that enable workers to be productive is called

97 Human capital

98 The lowest rate legally allowed for one hour of work is called

99 Minimum wage

100 The primary sector is made up of what types of jobs?

101 Farming, fishing, mining (related to natural resources)

102 The secondary sector is made up of what type of jobs?

103 Jobs related to the production of goods

104 The tertiary sector is made up of jobs related to

105 Services

106 The practice of working in a location other than the traditional office is called

107 Telecommuting

108 An organization of workers that seeks to improve working conditions is called a(n)

109 Labor union

110 Money whose value is based on the type of material from which it is made is called

111 Commodity money

112 The main difficulty of a barter system is finding

113 A double coincidence of wants

114 How is the Fed set up?

115 12 regional banks with a central decisionmaking board

116 What is the purpose of the Federal Reserve System? (3)

117 Regulate money supply Monitor banks Be the bank of the govt

118 What are liquid assets?

119 Those assets that can easily be turned into cash.

120 The percentage of the labor force that is jobless and actively looking for work is called the

121 Unemployment rate

122 The level of employment in which there is no cyclical unemployment is called

123 Full employment

124 Temporary unemployment experienced by people changing jobs is called

125 Frictional

126 When people who do not have the skills necessary for the available jobs look for work, the result is

127 Structural unemployment

128 A recession often causes

129 Cyclical unemployment

130 Mary went to dental school but is working as a cashier. Mary is considered to be

131 Underemployed

132 In the United States, economists estimate that full employment is an unemployment rate of about

133 4-5%

134 What is the difference between a final good and intermediate good?

135 Final good is sold to the user. Intermediate good is sold to a producer to make a final good.

136 The four factors that explain why wage rates differ are:

137 human capital, working conditions, discrimination, government action

138 Most jobs in the US today are in which sector?

139 Tertiary

140 P $3 S $2 $1 What is total revenue at equilibrium? D Q

141 P $3 S $2 $1 What is total revenue at equilibrium? $14 D Q

142 P $3 S $2 If an effective price floor were to be set, at $1 which of the given prices? D Q

143 P $3 S $2 If an effective price floor were to be set, at $1 which of the given prices? $3 D Q

144 P $3 S $2 $1 A of occurs at $1. D Q

145 P $3 S $2 $1 A shortage of 6 units occurs at $1. D Q

146 PPC is an acronym for

147 Production possibilities curve

148 Refer to the PPC on the board. Suppose there was a change in technology that made it easier to produce butter. What shift would occur?

149

150 Suppose this country lost some of its territory in a war. What shift would occur?

151

152 Suppose the swine flu kills 10% of the country s population. What shift would occur?

153

154 At which point is the economy producing all butter and no guns?

155

156 Which point shows underutilization?

157

158 Which point shows an impossible level of production?

159

160 Name all of the efficient points on the PPC.

161

162 Which point is efficient and shows a combination of guns and butter being produced?

163 What is the equation for calculating GDP?

164 Consumption+investment+government+n et exports

165 Gross domestic product (GDP) adjusted for changes in prices is called

166 Real GDP

167 Investment (in the GDP equation) measures what?

168 What businesses spend on improving their business and increases in inventory

169 Who is the chairman of the Fed?

170 Ben Bernanke

171 What type of money is issued by the United States government?

172 Fiat money

173 an increase in the general price level

174 Inflation

175 situation in which the demand for goods rises faster than the production of goods

176 Demand pull inflation

177 a situation in which an increase in production costs leads to an increase in prices

178 Cost-push inflation

179 a measure of changes in the prices of goods and services purchased by consumers

180 CPI