Economics Final Exam Review

Front 1

Anything that is used to produce goods and services

Back 1

Resource

Front 2

The condition in which our wants are greater than the resources available to satisfy those wants

Back 2

Scarcity

Front 3

Scarcity means that we have to make ____________.

Back 3

Choices

Front 4

The most highly valued opportunity or alternative that we give up when a choice is made

Back 4

Opportunity Cost

Front 5

What are 2 consequences of scarcity?

Back 5

1. Rationing Devices
2. Competition

Front 6

A way of deciding who gets what portion of the available resources and goods.

Back 6

Rationing device

Front 7

Rationing exists because of __________.

Back 7

Scarcity

Front 8

In economics, this term means additional or the cost to produce one additional unit.

Back 8

Marginal cost

Front 9

What are the four factors of production?

Back 9

1. Land
2. Labor
3. Capital
4. Entrepreneurship

Front 10

The physical and mental talents that people contribute to the production of goods and services.

Back 10

Labor

Front 11

Who is faced with scarcity?

Back 11

Everyone - individuals, businesses, countries, and society in general

Front 12

Produced goods that can be used as resources for further production such as factories, machines, and tools.

Back 12

Capital or Capital goods

Front 13

The situation in which more of one thing necessarily means less of something else.

Back 13

Trade-off

Front 14

Who is referred to as the "Father of Economics"?

Back 14

Adam Smith

Front 15

What are the 3 basic economic questions that each society must answer?

Back 15

1. What goods will be produced ?
2. How will the goods be produced ?
3. For whom will the goods be produced?

Front 16

Why does scarcity exist?

Back 16

Because resources are limited and the wants of society are unlimited.

Front 17

What do we call an economy that is based on customs and beliefs that have been handed down from one generation to the next?

Back 17

Traditional Economy

Front 18

A _________ is an economic system in which government controls and may own many of the resources.

Back 18

Socialism

Front 19

A __________ is an economic system in which individuals (not government)own most, if not all, the resources and control their use.

Back 19

Free Enterprise or Capitalism

Front 20

What options or choices do people have when dealing with scarcity?

Back 20

1. Do without the item
2. Find alternatives to satisfy the want
3. Pay more for a scarce item

Front 21

What is the "Labor Theory of Value"?

Back 21

The theory that states that any value in produced goods comes from the labor used to produce those goods.

Front 22

A "Free Enterprise System" is also known as ...

Back 22

"Capitalism" or a "Market Economy"

Front 23

Adam Smith's concept that we do good for others not out of kindness but rather for our own personal gain is called _________?

Back 23

The "Invisible Hand Theory"

Front 24

This individual is best known for his socialist views that self interest and particularly big business is not beneficial but rather harmful to society.

Back 24

Karl Marx

Front 25

According to your textbook, what are the 3 causes for globalization today?

Back 25

1. The end of the cold war
2. Advances in technology
3. Government policy changes

Front 26

What do we call a tax on imports?

Back 26

Tariff

Front 27

What is demand?

Back 27

The willingness and ability of buyers to purchase goods

Front 28

What is the "Law of Demand"?

Back 28

As price goes up, quantity demanded goes down and
As price goes down, quantity demanded goes up

Front 29

What are the 2 consequences of scarcity?

Back 29

1. Rationing devices
2. Competition

Front 30

What are the two major economic systems?

Back 30

Free enterprise and Socialism

Front 31

In what direction does a demand curve slope?

Back 31

Downward from left to right

Front 32

When demand increases, what direction does the demand curve shift?

Back 32

Demand curve shifts to the right

Front 33

When demand decreases, in what direction does the demand curve shift?

Back 33

Demand curve shifts to the left

Front 34

What is the only factor that can cause a change in quantity demanded (a movement along the original demand curve)?

Back 34

A change in "Price"

Front 35

How is a change in "quantity demanded" shown on a chart?

Back 35

As a movement along the original demand curve

Front 36

What does elasticity of demand measure?

Back 36

How much buyers respond to a change in price

Front 37

What is the "Law of Supply"?

Back 37

As price goes up, quantity supplied goes up and
As price goes down, quantity supplied goes down

Front 38

How is the law of supply shown on a graph?

Back 38

As a "direct relationship" - price and quantity supplied move in the same direction

Front 39

What is "supply"?

Back 39

The willingness and ability of sellers to produce and sell different quantities of a good at different prices

Front 40

What is the only factor that can cause a change in "quantity supplied" ( a movement along the original supply curve)?

Back 40

A change in "Price"

Front 41

In what direction does a supply curve slope?

Back 41

Upward from left to right

Front 42

Under what 2 conditions is a supply curve vertical?

Back 42

1. When additional units can no longer be produced
2. When there is no time to produce additional units for a particular event

Front 43

What doe we call financial aid or payments made by a government to a certain industry?

Back 43

Subsidy

Front 44

What do we call a legal limit on the number of units that can be imported into the country?

Back 44

Quota

Front 45

In what direction does a supply curve shift when there is an increase in supply?

Back 45

The supply curve shifts to the right

Front 46

In what direction does the supply curve shift when there is a decrease in price?

Back 46

The supply curve shifts to the left

Front 47

What causes equilibrium price to change?

Back 47

Changes in either supply or demand or both at the same time

Front 48

What is an "equilibrium price"?

Back 48

The price that occurs when the quantity demanded is equal to the quantity supplied

Front 49

Do supluses in the market cause prices to go up or down?

Back 49

Down

Front 50

Do shortages in the market cause prices to go up or down?

Back 50

Up

Front 51

What effect does an increase in supply have on equilibrium price?

Back 51

Equilibrium price falls

Front 52

What effect does a decrease in supply have on equilibrium price?

Back 52

Equilibrium price rises

Front 53

What effect does an increase in demand have on equilibrium price?

Back 53

Equilibrium price rises

Front 54

What effect does a decrease in demand have on equilibrium price?

Back 54

Equilibrium price falls

Front 55

When supply and demand change at the same time, what happens to equilibrium price when demand increases more than supply?

Back 55

Equilibrium price rises

Front 56

When supply and demand change at the same time, what happens to equilibrium price when supply increases more than demand?

Back 56

Equilibrium price falls

Front 57

What do we call a price set by the government that is below the equilibrium price?

Back 57

Price ceiling

Front 58

What do we call a price set by the government that is above the equilibrium price?(minimum wage is an example)

Back 58

Price floor

Front 59

In the U.S. the richest 10% of the population own what percent of our nation's wealth?

Back 59

70%

Front 60

What are the 4 characteristics that define a market?

Back 60

1.Number of buyers/sellers
2.Identical or different products
3. How easy or difficult is it to enter a market
4. Are sellers price searchers or price takers

Front 61

What is a price taker?

Back 61

A seller that can sell all of its output only at the equilibrium price and not at a penny more

Front 62

Which market type are price takers?

Back 62

Perfectly competitive market

Front 63

What is a price searcher?

Back 63

A seller that can sell somie of its output at various prices (price is determined through trial and error)

Front 64

What are the 3 major "barriers to entry" in a market?

Back 64

1. Legal barriers
2. Extremely low per-unit costs
3. Exclusive ownership of a resource

Front 65

What are the 3 types of "legal barriers"?

Back 65

1. Public franchises
2. Patents
3. Copyrihts

Front 66

An exclusive right granted to an inventor of a product or process for a period of 20 years is called __________?

Back 66

Patent

Front 67

This gives the orginators of literary or artistic productions the right to publish, print, or sell their intellectual property for a period of 70 years>

Back 67

Copyright

Front 68

What is an oligopoly?

Back 68

A market that is dominated by 3 or 4 firms that control 75-80% of the markets sales

Front 69

What is minimum wage?

Back 69

A government set wage floor (minimum wage in Illinois is $7.50 per hour)

Front 70

What happens when minimum wage is set above the equilibrium wage rate?

Back 70

It results in employers being willing to hire fewer workers

Front 71

What is "Derived Demand"?

Back 71

Demand for labor based on the demand for the product that the labor produces

Front 72

Because price and quantity supplied move in the same direction, this is shown on a graph as what type of relationship?

Back 72

Inverse relationship

Front 73

Since price and quantity demanded move in opposite directions, this type of relationship is referred to as __________?

Back 73

Direct Relationship

Front 74

What does "elasticity of demand measure?"

Back 74

How much buyers respond to a change in price

Front 75

What does "elasticity of supply measure?"

Back 75

How much sellers/suppliers respond to a change in price

Front 76

This individual who wrote "Wealth of Nations" believed that self interest causes people to work hard and take risks, which benefits society.

Back 76

Adam Smith

Front 77

Are price floors located above or below the equilibrium point and do they create a surplus or a shortage?

Back 77

Price floors are located above the equilibrium point and create a surplus

Front 78

Are price ceilings located above or below the equilibrium point and do they create a surplus or a shortage?

Back 78

Price ceilings are located below the equilibrium point and create a shortage.

Front 79

If all else remains the same what will happen to price if there is a decrease in demand for a good?

Back 79

Price will decrease

Front 80

Any place where people come together to buy goods and services

Back 80

market

Front 81

What 2 elements are necessary for "demand" to exist?

Back 81

1. Willingness to buy
2. Ability to buy

Front 82

The demand for necessities such as milk, water, and electricity is usually ...

Back 82

Inelastic demand

Front 83

What law states that as price goes up, the quantity demanded goes down and as price goes down, the quntity demanded goes up.

Back 83

Law of demand

Front 84

What law states that as price goes up, quantity supplied goes up and as price goes down, the quantity supplied goes down.

Back 84

Law of Supply

Front 85

a law that states that as a person consumes additional units of a good, eventually the utility or satisfaction from each additional unit of the good decreases.

Back 85

Law of diminishing marginal utility

Front 86

When there is an increase in demand, does the demand shift to the right or left

Back 86

It shifts to the right

Front 87

When there is a decrease in demand, which way does the demand curve shift?

Back 87

It shifts to the left