Comprehensive Economics Exam Review: Key Concepts in Resource Management and Market Dynamics
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Economics Final Exam Review
Use of fewer resources than an economy is capable of using. • Underutilization
Effort people devote to tasks for which they are paid. • Labor
The extra cost of adding one unit. • Marginal Cost
The most desirable alternative given up as the result of a decision. • Opportunity Cost
Principle that limited amounts of goods and services are available to meet unlimited wants. • Scarcity
The extra benefit of adding one unit. • Marginal Benefit
All natural resources used to make goods and services. • Land
When government sells and gives control of a business to individual investors. • Privatization
Struggle among producers for the dollars of consumers. • Competition
Power of consumers to decide what gets produced. • Consumer Sovereignty
Doctrine that government generally should not intervene in the marketplace. • Laissez-Faire
Concentration of productive efforts on a limited number of activities. • Specialization
Hope of reward or fear of penalty that encourages a person to behave in a certain way. • Incentive
Amount of money a business receives in excess of its expenses. • Profit
Organization that uses resources to produce a product or service, which it then sells. • Firm
Principle that people have the right to control their possessions and use them as they wish. • Private Property Rights
Government aid to the poor. • Welfare
Goods and services provided for free or at greatly reduced prices. • In-Kind Benefits
Principle that people may decide what agreements they want to enter into. • Free Contract
Commitment to the value of work. • Work Ethic
The principle that everyone has the same legal rights. • Legal Equality
Direct payments of money by the government to the poor, disabled, or retired people. • Cash Transfers
Right of a government to take private property for public use. • Eminent Domain
Two goods that are bought and used together. • Complements
Table listing the quantity of a good that all consumers will buy at various prices. • Market Demand Schedule
Measure of how consumers respond to price changes. • Elasticity of Demand
Goods that are used in place of one another. • Substitutes
Entire amount of money a company receives by selling goods or services. • Total Revenue
Change in consumption that results when a price increase causes real income to decline. • Income Effect
Consuming less of a good and more of another as a reaction to a price increase. • Substitution Effect
Not very sensitive to price changes. • Inelastic
Graph of the quantity supplied of a good at various prices. • Supply Curve
Amount of goods available. • Supply
Government intervention in a market that affects the production of a good. • Regulation
Chart that lists how much of a good a supplier will offer at various prices. • Supply Schedule
Sum of fixed costs plus variable costs. • Total Cost
Cost that rises or falls depending on the quantity produced. • Variable Cost
Tax on the production or sale of a good. • Excise Tax
Government payment that supports a business or market. • Subsidy
The amount of goods a firm has on hand. • Inventory
A sudden lack of availability of a good. • Supply Shock
The point at which the demand for a product or service equals the supply. • Equilibrium
Government allocation of goods and services. • Rationing
When quantity demanded is greater than quantity supplied. • Shortage
When the demand curve moves left or right. • Change in Demand
A price ceiling placed on the amount people pay for housing. • Rent Control
Illegal agreement among firms to divide the market, set prices, or limit production. • Collusion
