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Economics Spring 2014

Economics Spring 2014. Final Exam Review . QUESTION. People’s wants are unlimited. This fact means that which of the following is always present? scarcity shortages marginal utility costs of production. ANSWER.

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Economics Spring 2014

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  1. Economics Spring 2014 Final Exam Review

  2. QUESTION People’s wants are unlimited. This fact means that which of the following is always present? scarcity shortages marginal utility costs of production

  3. ANSWER People’s wants are unlimited. This fact means that which of the following is always present? scarcity

  4. QUESTION Name the four stages of the business cycle.

  5. ANSWER • Name the four stages of the business cycle. • EXPANSION • PEAK • CONTRACTION • TROUGH

  6. QUESTION • What are the factors of production? • goods and services • risk and opportunity • land, labor, and capital • wages, salaries, and profits

  7. ANSWER • What are the factors of production? • land, labor, and capital

  8. QUESTION • Which of the following would be included in the study of macroeconomics? • Salaries of college professors • Computer prices • Unemployment in the nation • Silver prices

  9. ANSWER • Which of the following would be included in the study of macroeconomics? • Unemployment in the nation

  10. QUESTION • "Taxes ought to be lowered.” is an example of what kind of economic language? • Positive • Normative

  11. ANSWER • "Taxes ought to be lowered.” is an example of what kind of economic language? • Normative

  12. QUESTION Provide an example of specialization.

  13. ANSWER • Specialization is when individual workers become highly skilled at a specific task and focus their efforts on that task, leaving other jobs to be done by other highly skilled workers. • EX: An assistant in a tailoring shop only replaces zippers.

  14. QUESTION • What is the law of unintended consequences? • Attempts to intervene always backfire. • Actions often have unforeseen effects. • Markets are always influenced by emotional factors. • Economic booms are always followed by downturns.

  15. ANSWER • What is the law of unintended consequences? • Actions often have unforeseen effects.

  16. QUESTION • Consumer sovereignty means…

  17. ANSWER • Consumer sovereignty means… • customers decide whether any business succeeds or fails

  18. QUESTION • Which kind of economy is most common today?

  19. ANSWER • Which kind of economy is most common today? • Mixed Economy

  20. QUESTION • Human-made goods that are used to produce other goods and services are which type of resource?

  21. ANSWER • Human-made goods that are used to produce other goods and services are which type of resource? • Capital

  22. QUESTION • The three fundamental economic questions are what to produce, ______________, and for whom to produce.

  23. ANSWER • The three fundamental economic questions are • whatto produce, • how to produce, • and for whom to produce.

  24. QUESTION Provide an example of the law of diminishing marginal utility. (Bonus points for acting out or illustrating your example)

  25. ANSWER • Provide an example of the law of diminishing marginal utility. (Bonus points for acting out or illustrating your example) • A new toy is less exciting to a child with many toys than to a child with just a few. • Someone who has one bicycle will have less use for another.

  26. QUESTION • The branch of economics that studies decision making by individuals, families and businesses is called what?

  27. ANSWER • The branch of economics that studies decision making by individuals, families and businesses is called what? • Microeconomics

  28. QUESTION • The act of transforming a private enterprise into a government enterprise, is called what?

  29. ANSWER • The act of transforming a private enterprise into a government enterprise, is called what? • NATIONALIZATION

  30. QUESTION What is an example of thinking at the margin? (Bonus points for acting out or illustrating your example)

  31. ANSWER • What is an example of thinking at the margin? (Bonus points for acting out or illustrating your example) • John has six shirts and is trying to decide whether to buy a seventh.

  32. QUESTION • The quantity supplied exceeds the quantity demanded at the current price; this results in what condition?

  33. ANSWER • The quantity supplied exceeds the quantity demanded at the current price; this results in what condition? • Surplus

  34. QUESTION The amount of soap made matches the amount of soap that people want to buy; this results in what condition?

  35. ANSWER • The amount of soap made matches the amount of soap that people want to buy; this results in what condition? • MARKET EQUILIBRIUM

  36. QUESTION What is a price ceiling?

  37. ANSWER What is a price ceiling? When a government or other agency sets a minimum price of a good. Often below the equilibrium price.

  38. QUESTION What is the result of a price ceiling set below the equilibrium?

  39. ANSWER • What is the result of a price ceiling set below the equilibrium? • SHORTAGE

  40. QUESTION Illustrate the law of demand

  41. ANSWER Illustrate the law of demand

  42. QUESTION Illustrate the law of supply

  43. ANSWER Illustrate the law of supply

  44. QUESTION • If the demand for a good increases because consumer income increases, the good is called what? • Inferior good • Normal good • Necessity good • Luxury good

  45. ANSWER • If the demand for a good increases because consumer income increases, the good is called what? • Normal good

  46. QUESTION What causes the demand curve to shift left?

  47. ANSWER • What causes the demand curve to shift left? • A decrease in overall demand.

  48. QUESTION • A measure of the degree to which the quantity demanded or supplied of a good or service changes in response to a change in price is calledwhat?

  49. ANSWER • A measure of the degree to which the quantity demanded or supplied of a good or service changes in response to a change in price is calledwhat? • Elasticity

  50. QUESTION • In which market structure do producers have the most market power? • monopolistic competition • monopoly • oligopoly • perfect competition

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