Download FINAL EXAM REVIEW

Economics
FINAL EXAM REVIEW
______________________ 1. characteristic of wants (limited/unlimited?)
______________________ 2. characteristic of resources (limited/unlimited?)
______________________ 3. the basic economic problem
Identify the four factors of
______________________
______________________
______________________
______________________
production defined below:
4. natural resources/raw materials
5. machinery/equipment/the factory
6. human resource: mental and physical efforts
7. human resource: initiative; risk taking; more important in capitalism than in any
other type of economic system
Identify the three basic economic systems as defined below:
______________________ 8. decisions (what, how, for whom) are made through the interactions of individual
buyers and sellers (supply and demand) in the marketplace)
______________________ 9. decisions (what, how, for whom) are made by government
______________________ 10. economic decisions (what, how, for whom) are determined on the basis of custom
– what has always been produced
______________________ 11. type of economy that mixes command (government) and market (free enterprise)
List the three basic economic questions:
______________________ 12.
______________________ 13.
______________________ 14.
Identify the terms defined or explained below:
______________________ 15. what is given up when making a choice; forgone opportunity; next best alternative
not taken
______________________ 16. a good used to produce another good: i.e., machinery, equipment
______________________ 17. total revenue – total costs = ____________
______________________ 18. lower prices, greater variety and better quality are benefits of?
______________________ 19. # of unemployed + # of employed = _____________
______________________ 20. a minimum price imposed by government below which the price cannot fall;
located above Pe, it creates a surplus
______________________ 21. a maximum price imposed by government above which the price cannot rise;
located below Pe, it creates a shortage
______________________ 22. occurs when the price rises above Pe and QS > QD
______________________ 23. occurs when the price falls below Pe and QD > QS
______________________ 24. relationship between price and QD (inverse or direct?)
______________________ 25. relationship between price and QS (inverse or direct?)
Identify the market structures characterized below:
______________________ 26. many firms; homogeneous product; low concentration of economic power; high
degree of competition; a price taker – no control over price; no barriers to entry
into market
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______________________ 27. many firms; heterogeneous product; low concentration of economic power;
competition; some name brands can corner the market and raise their prices; few, if
any barriers to entry
______________________ 28. few firms; high concentration of economic power; less competition; significant
barriers to entry; some control over price
______________________ 29. one firm; total concentration of economic power; no competition; entry blocked;
price-setter
Identify the types of business organization based on ownership characterized below:
______________________ 30. one owner; disadvantages: unlimited liability; limited life, limited capital;
advantages: pride in ownership; keep all profits; no double taxation; own boss, etc.
Disadvantage: It is very difficult to raise money for business
______________________ 31. two or more owners; disadvantages: unlimited liability, limited life; advantages:
owners can specialize in different aspects of the business; pride in business
ownership, etc.
______________________ 32. many owners (stockholders); advantages: limited liability; unlimited life; greater
access to capital; disadvantages: double taxation, etc.
Identify the terms defined/explained below:
______________________ 33. means government should “let do” – stay out of the economy
______________________ 34. modern economic theory based on a market economic system; also called free
enterprise system
______________________ 35. economic model that illustrates the exchanges taking place between consumer
households and business firms within the markets (resource and product) of the
economy
______________________ 36. market in the circular flow model (CFM) in which resources (L, L, C, E) are
provided by consumers and purchased by business firms with a payment of rent,
wages, interest, and profit
______________________ 37. market in the CFM in which goods and services are sold by business firms and
purchased by consumers
______________________ 38. income earned for labor
______________________ 39. income earned for capital
______________________ 40. income earned for land
______________________ 41. income earned for entrepreneurship
______________________ 42. part of economics that studies the economy as a whole (macro or micro?)
______________________ 43. part of economics that studies the individual parts of the economy
______________________ 44. the sum of the # of employed + # of unemployed
______________________ 45. = (the # of unemployed/the labor force) X 100
______________________ 46. = direct cost (tuition, etc.) of going to college + the work given up
types of mergers (combination of two or more businesses):
______________________ 47. same product; same stage in production process
______________________ 48. same product line; different stage in production process
______________________ 49. unrelated products
production possibilities curves:
______________________ 50. a point on the curve represents (full or less than full?) use of resources
______________________ 51. a point under the curve represents (full or less than full?) use of resources
______________________ 52. a point outside the curve is (possible or impossible?) given resources
______________________ 53. movement along a PPC curve results in a _______?
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______________________ 54. to get something, one must give up something (identify term)
Identify the four phases of the business cycle described below:
______________________ 55. high point in economic activity (maximum employment and production; increase in
price level)
______________________ 56. increasing AD, decreasing unemployment, increase in store orders, etc.
______________________ 57. rising unemployment; decreasing production; decreasing AD
______________________ 58. lowest level of economic activity
______________________ 59. problem associated with peak phase of business cycle
Identify the term defined or explained below:
______________________ 60. total responsibility for business debts; disadvantage of sole proprietorship and
partnership
______________________ 61. type of production cost (i.e., cost of pollution) that must be paid by society if
government does not regulate business
______________________ 62. a gap between potential output and actual output; develops during a recession
when cyclical unemployment is occurring
types of unemployment:
______________________ 63. in between; first time job seekers; quit job to find better one
______________________ 64. caused by change in demand for products/skills of workers; foreign competition;
or automation
______________________ 65. caused by too little AD in the economy; recession; GDP gap
characteristics of capitalism:
______________________ 66. freedom of economic choice
______________________ 67. individual ownership of property resources
______________________ 68. self interest guides economic decision making (i.e. desire for profit)
______________________ 69. economic rivalry
______________________ 70. role of government in capitalism (stay out!)
identify economic goals:
______________________ 71. freedom of economic choice/decision making
______________________ 72. getting the most of scarce resources through competitive markets
______________________ 73. fairness in economic decision making
______________________ 74. 94-95% of labor force employed
______________________ 75. increases in GDP; increase in productive potential
______________________ 76. cushion against economic risk (social security)
______________________ 77. absence of serious inflation or deflation
78. government policies
expansionary policy: fight _____________________
monetary policy (FED): ____ MS (money supply)
____ reserve requirement; ____ discount rate
____ securities
fiscal policy (Congress/President)
___ government spending ____ taxes
contractionary policy: fight ____________________
monetary policy (FED): ____ MS (money supply)
____ reserve requirement; ___ discount rate
____ securities
fiscal policy (Congress/President)
____ government spending ____ taxes
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Drawing supply and demand curves
increase in demand:
causes: (NPD)
____ buyers
____ price of complement
____ price of substitute
____ tastes
decrease in demand:
causes: (NPD)
____ buyers
____ price of complement
____ price of substitute
____ tastes
increase in supply:
causes: (NPD)
____ resource prices
____ technology
____ costs of production
____ gov’t regulation
decrease in supply:
causes: (NPD)
____ resource prices
____ technology
____ costs of production
____ gov’t regulation
PPC: illustrate the condition or event
unemployment
increase in resources
decrease in resources
trade-off
You will also need to be able to interpret PPC, circular flow, supply and demand, and budget line models.
Be familiar with the term “There is no such thing as a free lunch,” TINSTAAFL.
A durable good is one that lasts more than three years when used regularly.
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