Download Economics Summative Exam Review

Economics Summative Exam Review
1. The act of buyers and sellers freely and willingly engaging in market transactions is called:
2. The role of government in the United States economy has several aspects. When it acts to preserve
competition it is acting as a:
3. The people who start up new businesses and organize their own labor, capital, and land are called:
4. The Law of Demand states that the quantity demanded varies
5. Using the graph above that shows the market demand and supply curve for a product, what will be the
demand if the price is $10?
6. A price floor establishes the lowest legal price that can be paid for a good or service. One example of this
is the Federal Minimum Wage. How might this have both positive and negative effects on the economy?
7. A figure that shows how total output changes when the amount of a single variable (usually labor)
changes while all other inputs are held constant is known as:
8. When a single seller of a particular product does not allow competition it is called:
9. The Sherman Antitrust Act
10. A person is unemployed of they are able to work, willing to work, and cannot find work. At what
percentage do economists set “full employment”?
11. As a result of inflation, fewer people borrow money because:
12. When inflation occurs, people on a fixed income struggle because:
13. When unemployment is high, how does that affect the economy?
14. Issuing of currency, lending resources to banks, and insuring deposits are all functions of:
15. When the Federal Reserve decides to put less money into circulation, what is the general effect on
lending policies?
16. How does government spending on education and workforce training raise future standards of living for a
country?
17. A condition of acute shortages, high unemployment, and excess capacity at manufacturing facilities is a(n)
18. The main difference between a socialist economy and a capitalist economy is:
19. Why do nations trade with one another?
20. Two major reasons that a company in a developed country will hire workers in undeveloped countries to
make a product are:
21. Protectionists justify high tariffs because they
22. The purpose of government in a command economy is to
23. An example of a market economy is
24. Which group of people ultimately determines the products that a free enterprise economy produces?
25. The United States can best be described as having a
26. Which of the following is a characteristic of a traditional economy?
27. Define a market economy
28. In general, how does education affect future income?
29. What is the goal of using attractive, young people in advertising?
30. Why is it a good idea to not “put all your eggs in one basket” or invest in a single company versus
diversifying your investments?
31. What is a disadvantage and advantage of a short-term investment?
32. This type of individual investment can vary greatly from day to day.
33. Scarcity is the condition that results from society not having enough resources to produce all the things
people would like to have. Why is scarcity a universal problem?
34. The four factors of production are land, capital, labor, and entrepreneurs. What would happen if one of
these factors was missing?
35. When the production of one item increases, the production of another item decreases. Using the graph
above, what is the opportunity cost of producing 100 more units of clothing?
36. Why is it economically efficient and necessary for people to keep the rewards they earn?
37. Consumers have power in the economy because ultimately they determine what is produced. This is
demonstrated by the phrase “the customer is always right.” Which of the following terms reflects this
power?
38. The three basic economic questions are WHAT to produce, HOW to produce, and
39. A risk-taker in search of profits is known as a(n)
40. Increased competition, higher profits, more and better-paying jobs, and healthy tax revenues are all benefits of
successful
41. The study of economics is important because it enables us to
42. A popular model used to illustrate the concept of opportunity cost is
43. What factor of production do these images illustrate?
44. In the time period covered by the production possibilities curve, the company decides to make 4 gallons of red
paint. How many gallons of blue paint can the company make with the available time and resources?
“The study of economic theory is not defensible on aesthetic grounds — it hardly rivals in elegance the
mathematics or physics our sophomores learn. The theory is studied only as an aid in solving real problems, and it
is good only in the measure that it performs this function.”
Source: George J. Stigler, "Monopolistic Competition in retrospect," in Five Lectures on Economic Problems, 1949
45. According to this author, a good economic theory is one that
Too much marketing today focuses on awareness rather than reasons to buy. In the old days, awareness advertising
was more effective. There was less competition. All you had to worry about was whether or not people
remembered your product. As technology and more kinds of media have come about, it’s no longer enough to be
remembered. The consumer has too many choices. Your marketing has to send the message that you are relevant.
You need to be sending reasons to buy.
Source: Business Week, June 7, 1999
46. This passage advises advertisers to focus on the economic concept of
47. The minimum wage is an example of a federal law that supports
48. Which economic system can change direction quickly and drastically?
49. Which U.S. economic and social goal is missing from the diagram above?
50.
The Americans with Disabilities Act bans discrimination in employment against people with disabilities. On this
diagram, would you locate this law in P, Q, R, or S?