Final Review

Ch. 1

100

Whats the difference between a good and a service?

Good- Physical objects such as clothes or shoes Service- Actions or activities that one person performs for another

200

Explain the guns or butter trade-off issue that country's face

Ex: A country that decides to produce more military goods (guns) had fewer resources to devote to consumer goods (butter)

300

Explain Opportunity Cost and trade-offs (difference). What is the opportunity cost of forgoing college for a job straight out of high school

Opp cost- The MOST DESIRABLE alternative given up as the result of a decision Trade-off- All alternatives we give up when we make a decision

400

Factors of production are the resources that make all goods and services as we all know.. What are the 3 factors of production?

Land, Labor, and capital (human made resources that are used to produce other goods and services)

500

Describe the difference between scarcity and shortage? Give examples of each

scarcity- limited quantities of resources to meet unlimited wants shortage- a situation in which a good or service is unavailaible

Ch. 2

100

What is the struggle among various producers for the consumer’s business called? a. Socialism b. Competition c. Incentive d. Self-regulation

b. Competition

200

9. Which of the following is NOT characteristic of a centrally planned economy? a. The central government owns all land and capital b. The central government makes all economic decisions c. Each collective or factory sets its own goals. d. Each person is assigned a job.

c. Each collective or factory sets its own goals.

300

Why does even a free market economy need some government intervention? a. To provide for things that the marketplace does not address b. To ensure that the government has the freedom to tax as necessary c. To make sure that the government can fulfill its needs for military personnel d. So that the government has some control over factor resources

a. To provide for things that the marketplace does not address

400

What is specialization and how does it make us more efficient? What is an incentive and why does it make us more efficient? What is an incentive in mixed economy? Is there really any for businesses in centrally planned?

Specialization- concentration of productive efforts of individuals and firms on a limited number of activities. Its easier for someone to do one task very well than multiple tasks Incentive- an expectation that encourages people to behave in a certain way

500

Describe some differences between a mixed economy, free market economy, and a centrally planned economy

Mixed- Combines free economy with gov. regulation Central- Central gov. controls all economic decision Free- No gov regulation. Economy is self regulated by individual acting in own self-interest

Ch. 3

100

1. Which of the following is a private organization that attempts to influence public officials to act or vote in ways that will benefit the group’s members? a. Market research group b. Free enterprise group c. Public policy group d. Interest group

d. Interest group

200

Describe the the business cycle

Economic expansion followed by contraction. peak, trough, expansion, contraction

300

List and describe 2 federal agencies that regulate industries whose goods and services affect the well-being of the public

FDA, FTC, FCC, FAA, EEOC, EPA, OSHA, CPSC, NRC

400

Name 2 redistribution programs or examples of programs that help less fortunate, poor, elderly, etc. people. Describe what they do

Cash Transfers Temporary Assistance for Needy Families- welfare Social Security Unemployment Insurance Worker's Comp In-Kind Benefits- food stamps, givaways, subsidized housing etc. Medical Benefits- Medicare and Medicaid Education

500

Describe a positive and negative externality. Give examples of both

Externality- An economic side effect of a good or service that generates benefits or costs to someone OTHER than the person deciding how mush to produce or consume Positive- Someone buys old house next to you and fixes up Negative- Business dumps chemical waste in nearby river

Ch. 4 & 5

100

What is the law of demand?

the way that a change in price determines whether or not consumers buy goods. Price goes up- Demand goes down and vice versa

200

What is the Law of Supply?

the tendency of suppliers to offer more of a good at a higher price. Price goes up- supply goes up

300

What two things make up Total Cost? a. Marginal Cost and Operating Cost b. Fixed Cost and Marginal Cost c. Variable Cost and Operating Cost d. Fixed Cost and Variable Cost Describe the difference between the 2

d. Fixed Cost and Variable Cost Fixed- Cost that stay same Variable- costs that change

400

How can a change in population cause a change in the type of clothing that is in demand?

Ex: Baby Boomers- When young baby clothes were more in demand

500

Name two factors that can cause a change in demand Name two factors that can cause a change in supply

Demand- Income, Consumer expectations, population, consumer tastes and advertising Supply- input costs, future expectations, technological changes, gov taxes, gov subsidies, and gov regulations

Ch. 6 and others

100

Name the 4 types of market structures and very briefly describe them

Perfect competition, monopoly, monopolistic competition, and oligopoly

200

Describe, separately, how GDP, Inflation, and unemployment can all affect negatively economic growth and lead to the lowering of the standard of living

GDP- If production doesn't increase over years, economic growth will go down, lowering the standard of living Inflation- If inflation goes up too much, the purchasing power of the dollar will decrease, lowering the standard of living Unemployment- If more people become unemployed, production goes down, lowering the standard of living

300

Businesses want to produce at.. a. Price Floor b. Price ceiling c. Equilibrium d. Surplus What does this vocab word mean

c. Equilibrium - quantity demanded and quantity supplied are equal

400

Name 3 types of ways to invest or save your money and describe the differences in risk and interest or rate of return

Savings- low risk, low reward Bonds- slightly higher risk, little more reward Mutual funds- " " " " " " " Stocks- varies. Higher reward, higher risk

500

Describe a.. Substitute good Complimentary good Surplus Shortage

Substitute good- goods used in place of one another Complimentary good- goods bought and used together Surplus - Supply exceeds demand Shortage - Demand exceeds supply