Econ-Final Exam Review

The definition of economics is the study of

• how governments set social policy.

• the influence of the Federal Reserve on history.

• how governments dictate which businesses succeed or fail in a country.

• the use of scarce resources that have alternative uses.

You have $20. With that $20, you can either put gas in your car, take a date to the movies, or buy new clothes. You cannot, however, do all three choices. Your first choice for the use of the $20 is to put gas in your car. Your second choice is to take a date to the movies. Your third choice is to buy new clothes. The opportunity cost for using the $20 to put gas in your car is

• $20

• taking a date to the movies.

• buying new clothes.

• both taking a date to the movies and buying new clothes.

You have 12 hours available for study (homework, test preparation, work on school project), relaxation (watching TV, spending time on Facebook, etc.), and sleeping between when you get home on a school day and when you must get up for school the next day. When you are considering spending an extra hour studying instead of using that hour for sleep or relaxation, you are illustrating the principle of

• thinking at the margin.

• opportunity cost.

• incentives.

• TANSTAAFL.

Which of these statements is descriptive of a market economy?

• Most media is state-owned and operated.

• The government determines what is produced and by whom.

• Major economic decisions are made for individuals, not by them.

• Major economic decisions are made by individuals, not for them.

Opportunity cost refers to

• the dollar amount attached to a good or service.

• the value of the next best alternative.

• the cost of not expanding production.

• the cost of labor when production is expanded or changed.

Which of these is an accurate statement about mixed economies today?

• There are more mixed economies in the world than any other kind.

• Very few economies today can be accurately described as “mixed.”

• Mixed economies exist mostly in nations with communist governments.

• Most nations that once had a mixed economy have evolved into command economies.

A nation’s leaders must decide whether to spend money on the military or on funding safety net programs. What do economists call this type of choice?

• guns or butter issue

• underutilization of resources

• a decision at the margin

• the law of increasing costs

Economics is the study of how people satisfy their ______ and ______.

• wants; thoughts
• thoughts; desires
• wants; needs
• rent; utilities

Resources are limited due to the fact that all resources are _____.

• sketchy
• expensive
• cheap
• scarce

The factors of production include ________, ________. and ________.

• air, sea, land
• land, labor, investment
• labor, land, capital
• earth, wind, fire