FINAL EXAM REVIEW

Economics Spring 2014

QUESTION

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

scarcityshortagesmarginal utilitycosts of production

ANSWER

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

scarcity

QUESTION

Name the four stages of the business cycle.

ANSWER

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

QUESTION

What are the factors of production?

goods and services risk and opportunity land, labor, and capital wages, salaries, and profits

ANSWER

What are the factors of production?

land, labor, and capital

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

ANSWER

Which of the following would be included in the study of macroeconomics?

Unemployment in the nation

QUESTION

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

PositiveNormative

ANSWER

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

Normative

QUESTION

Provide an example of specialization.

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.

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.

ANSWER

What is the law of unintended consequences?

Actions often have unforeseen effects.

QUESTION

Consumer sovereignty means…

ANSWER

Consumer sovereignty means…customers decide whether any business

succeeds or fails

QUESTION

Which kind of economy is most common today?

ANSWER

Which kind of economy is most common today? Mixed Economy

QUESTION

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

ANSWER

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

Capital

QUESTION

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

ANSWER

The three fundamental economic questions are

what to produce, how to produce, and for whom to produce.

QUESTION

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

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.

QUESTION

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

ANSWER

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

QUESTION

The act of transforming a private enterprise into a government enterprise, is called what?

ANSWER

The act of transforming a private enterprise into a government enterprise, is called what?

NATIONALIZATION

QUESTION

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

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.

QUESTION

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

ANSWER

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

QUESTION

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

ANSWER

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

QUESTION

What is a price ceiling?

ANSWER

What is a price ceiling?When a government or other agency sets a

minimum price of a good. Often below the equilibrium price.

QUESTION

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

ANSWER

What is the result of a price ceiling set below the equilibrium? SHORTAGE

QUESTION

Illustrate the law of demand

ANSWER

Illustrate the law of demand

QUESTION

Illustrate the law of supply

ANSWER

Illustrate the law of supply

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

ANSWER

If the demand for a good increases because consumer income increases, the good is called what?

Normal good

QUESTION

What causes the demand curve to shift left?

ANSWER

What causes the demand curve to shift left?

A decrease in overall demand.

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 called what?

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 called what?

Elasticity

QUESTION

In which market structure do producers have the most market power?

monopolistic competition monopoly oligopoly perfect competition

ANSWER

In which market structure do producers have the most market power?

monopoly

QUESTION

Name three categories of economic activity NOT included in the GDP.

ANSWER

Name three categories of economic activity NOT included in the GDP. Secondhand Transactions Transfer Payments Stock Market Transactions Nonmarket Activities The Underground Economy

QUESTION

______________ is valued at prices in a base year.

Real GDPNominal GDP

ANSWER

______________ is valued at prices in a base year.

Real GDP

QUESTION

What are Adam Smith’s Four Maxims regarding taxation?

ANSWER

What are Adam Smith’s Four Maxims regarding taxation?

EquityCertaintyConvenienceEfficiency

QUESTION

What are the four types of unemployment?

ANSWER

What are the four types of unemployment?frictional unemploymentstructural unemploymentseasonal unemploymentcyclical unemployment

FINAL QUESTION

Label the stages of the business cycle