Exam Review

Question 1

Value of the next best alternative….has to be given up for the action that is chosen

Answer 1

Opportunity cost

Question 2

Company’s office building is an example of…

Answer 2

Capital

Question 3

Economists build economic models

Answer 3

To help analyze the way the world works.

Question 4

Does NOT describe what economists do

Answer 4

Use factors of production to produce goods.

Question 5

A car used by a messenger service is an example of….

Answer 5

Capital

Question 6

Businesses can make decisions about the best use of their resource ps by analyzing

Answer 6

Production Possibilities

Question 7

Economics is primarily concerned with…

Answer 7

Use of resources

Question 8

All the combinations of goods and services that can be produced in a given time with a fixed amount of resources are called

Answer 8

Production possibilities

Question 9

Entrepreneurship refers to the ability to..

Answer 9

Start new businesses, introduce new products and processes, and improve management techniques.

Question 10

Adam Smith’s “invisible hand” refers to the role of…

Answer 10

The market

Question 11

Another term for a capitalist system is a…

Answer 11

Market economy

Question 12

According to Adam Smith

Answer 12

Government should not interfere in the market place

Question 13

Major characteristic of a pure market economy is…

Answer 13

Unrestricted competition

Question 14

It is easier to start your own business in a…

Answer 14

Free enterprise system

Question 15

The word “equity” means

Answer 15

Fairness

Question 16

In as capitalist system, most property is…

Answer 16

Private property

Question 17

Command economy country

Answer 17

North Korea

Question 18

A laissez-faire system is one in which…

Answer 18

Government interference in the economy is minimal.

Question 19

What goods and services should be produced, how they should be produced, and who should share in what is produced are the three basic questions addresses by…

Answer 19

All economies

Question 20

Law of Demand: when price of an item goes up, the quantity demanded….

Answer 20

Falls

Question 21

Law of Supply: higher prices prompt producers to….

Answer 21

Produce mor

Question 22

When the price of a good is high for consumers, they look for

Answer 22

Substitutes

Question 23

The quantity demanded of a product is affected by

Answer 23

Price

Question 24

Diminishing marginal utility refers to the fact that

Answer 24

Additional satisfaction declines as additional units of an item are consumed

Question 25

“The more you have of something, the less satisfaction you will get from an additional unit” is an example of what principle

Answer 25

Law of diminishing marginal utility

Question 26

If the price of an item rises, quantity demanded usually

Answer 26

Falls

Question 27

Demand for one particular brand or coffee is probably

Answer 27

Elastic

Question 28

The more substitutes there are for a good, the

Answer 28

More elastic the demand

Question 29

If the price of an item is above its equilibrium price, the result is a

Answer 29

Surplus

Question 30

Non-price competition is a characteristic of both

Answer 30

Monopolistic competition and an oligopoly

Question 31

One advantage of an oligopoly is

Answer 31

More stable prices

Question 32

Federal agencies actually decrease competition in an industry by

Answer 32

Creating legal barriers to entry in an industry

Question 33

NOT a characteristic of a monopoly

Answer 33

Presence of many competing firms

Question 34

Factors of productions

Answer 34

Land, labor, and capital