Economics Final Review

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Economics is defined as

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The study of how people use scarce resources to satisfy their wants and needs

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The difference between a need and a want is that a need is

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A basic necessity such as food, shelter and clothing

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The fundamental difference between a durable good and a nondurable good is

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The length of time that it lasts when it is used on a regular basis

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Which of the following makes someone an entrepreneur? Earning a lot of money as an engineer at Proctor and Gamble, Becoming a highly paid performer and working on movies, A door greeter at Wal-Mart, Running a service that hires people, orders equipment and installs sprinkler systems in buildings

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Running a service that hires people, orders equipment and installs sprinkler systems in buildings

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The production possibilities frontier, or curve represents

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The best an economy can produce with its current factors of production

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Which of the following statements is true about a market economy? Market participants act seeking to satisfy their self interests, Taxes in the marketplace help communicate the costs and benefits of an item, Central planning becomes easier as better technology is adopted in the marketplace, The market system tends to distribute resources evenly across all consumers

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Market participants act seeking to satisfy their self interests

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You were observing country X and you noticed that the government, through taxation, was attempting to take care of the essential needs of its citizens while the market system was taking care of the wants. You, as an astute economics student, operating with limited information, would classify this country as having a

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Mixed economy

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The saying that “there is no such thing as a free lunch” is based on the premise that

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Everything has an opportunity cost

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The Law of Demand states that

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As price increases, demand decreases

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Government subsidies would typically cause a shift _________________in a supply curve

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Right