Economics Final Exam Study Guide



Economics Final Exam Study Guide

Please also review your Basics, all lecture notes, all reading notes, and charts/graphs from class. Use our class website () to get copies of old work or to re-watch the PPT slide shows/notes.

True/False

1. Opportunity costs are roughly the same for everyone who attends college.

2. Trade-offs are another way of talking about opportunity costs.

3. Macroeconomics considers the study of both the small and big picture.

4. Globalization is expanding everyone’s ability to potentially sell to more people.

5. Communism and socialism have similar characteristics.

6. Today in North Korea, the government owns almost all the resources in the country.

7. In their books, Adam Smith and Karl Marx both state that capitalists improve the condition of workers.

8. Profit is the amount of money left over after all the costs of production have been paid.

9. Total cost is the average cost of a good multiplied by the number of units sold.

Practice these questions and graphs:

10. Rationing exists because of

11. The opportunity cost of something is

12. The marginal cost of something is

13. If your parents offer you cash for every A on your report card, that is an example of

14. Animals are classified as which of the following factors of production?

15. Scarcity exists when

[pic]

16. On the accompanying production possibilities graph, which point or points are possible?

17. On the accompanying production possibilities graph, which point represents the maximum production of snowboards?

18. On the accompanying production possibilities graph, which point or points are not possible?

19. How a society answers the three economic questions defines

20. Resources are owned and controlled by private individuals in what type of economic system?

21. In a traditional economy, people

22. With globalization, the world is moving toward

23. Offshoring refers to

24. In a socialist economic system, the government

25. What are the three economic questions?

26. Adam Smith believed

27. The responsibilities of people in a free enterprise economy include

28. Which of the following is not a feature of free enterprise?

29. Eminent domain refers to

30. The circular flow diagram shows

31. What is a public good?

32. What is a private good?

33. An externality exists when

34. Positive externalities occur when one person’s actions

35. A negative externality

36. The circular flow has two loops. What do they represent?

37. A market is any place

38. In economics, demand means

39. Demand curves

40. What could increase demand for a good?

41. A shift of the demand curve represents

42. If demand for a good is elastic and its price decreases, total revenue

43. The law of demand can be represented

44. If the demand for computers increases, the demand curve will

45. When goods are substitutes, what happens to the demand?

46. With complementary goods, what happens to the demand?

47. Elasticity of demand measures

48. The law of supply says that

49. Quantity supplied refers to

50. A vertical supply curve indicates that

Use these two graphs to answer the following questions.

[pic]

51. On the accompanying graph, what shift correctly represents the supplier’s response to a decrease in the costs of production?

52. If the price of a product increases, we would expect the accompanying graph to show

53. The law of supply is shown on a graph as

54. Elasticity of supply is measured by looking at the relationship between

Use these two graphs to answer the following questions.

[pic]

55. If a tax were applied to the firm’s product, what would represent the seller’s response?

56. If a new quota were imposed on a seller’s product, what would show the seller’s response?

57. If prices fall for a product, we could expect the graph to show

An advance in technology would be illustrated on a graph as

59. Equilibrium price is

60. Equilibrium can be expressed as

61. A price floor results in

62. A legal maximum price at which a good can be sold is a

63. At the equilibrium price, what is true?

Use these four graphs to answer the following questions.

Changes in the Equilibrium Price

[pic]

64. Which graph illustrates what would happen if candy producers are informed that the cost of sugar has doubled?

65. Which graph reflects the impact on the market for drinking water as the result of a hurricane that hits Florida?

66. Which graph reflects the impact on the market for homes as new construction companies build houses in Houston, Texas?

67. Which graph reflects the impact on the market for VCRs as consumers purchase more and more DVDs?

[pic]

68. In the accompanying graph, which area shows a surplus?

69. In the accompanying graph, which area shows a shortage?

70. When deciding between jobs, people consider

71. Minimum wage is

72. Increasing your educational level can

73. A union is

74. If the union and the employer are unable to reach an agreement, the union may

75. Credit cards are not considered ____________.

76. We refer to the Fed as the central bank because it is

77. Why is Paper money used?

78. When a good or service has been counted in GDP more than once, we refer to that as

79. Illegal goods and services are not counted in GDP because

80. If a product is produced but not purchased, it

81. The term per capita means

82. GDP is better than GNP at calculating

83. GNP is better than GDP at calculating

84. A decrease in the average level of prices is called

85. Inflation generally

86. The two types of fiscal policy are

87. Fiscal policy addresses

88. The money left over to spend after all deductions have been made from people’s earnings is called

89. Expansionary policy:

90. Contractionary policy by the Fed

91. The largest source of tax revenues for the federal government comes from

92. Sales taxes are applied to purchases such as

93. An example of an excise tax is a tax on

94. Property tax is a major source of revenue for

95. Those subject to the alternative minimum tax are people

96. A stock

97. A company that wants to raise money may

98. When a company offers to sell its stock to the public for the first time, it is called a(n)

99. The share of the profits of a corporation, paid out to stockholders, is

100. Currently the Dow Jones Industrial Average is composed of

Which part of this review was easiest for you?

Where do you need to study more?

**This review will be due on the day of the final. Final schedule: (1st period=Wednesday, January 19th, 3rd and 5th periods= Thursday, January 20th, 2nd and 4th periods=Friday, January 21st)**

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