Economics Final Review

Economists assume people choose something when its expected costs are less than its

• working life.

• chief competitors

• anticipated benefits

• required maintence

What does it mean to say that free markets are efficient?

• Buyers and sellers trade until both are satisfied.

• Information is communicated around the world.

• Everyone is assured of getting basic necessities.

• Decisions are made quickly with little confusion.

What does Adam Smith argue in "The Wealth of Nations"?

• Government interference helps the economy.

• Competition is crucial for a healthy economy.

• A free market economy is not an ideal system.

• Competition is very damaging to the economy.

Economics is often defined as the study of how people choose to

• analyze the benefits and consequences of their decisions.

• sell goods and services that are produced domestically.

• measure efficiency with the production of luxury goods.

• use their limited resources to satisfy their unlimited wants.

When an economist uses objective analysis to find out how things ought to be done, this is

• normative economics.

• tradeoff economics.

• scarcity economics.

• positive economics.

People’s wants are unlimited. This fact means that which of the following is always present?

• scarcity

• shortages

• marginal untility

• costs of production

What are the factors of production?

• goods and services

• risk and opportunity

• land, labor, and capital

• wages, salaries, and profits

Why are tradeoffs necessary?

• Resources are limited.

• Every product has flaws.

• People want different things.

• Advertisers promote products.

What does it mean to maximize utility?

• to become as efficient as possible

• to gain the most satisfaction possible

• to strengthen a national infrastructure

• to strengthen the skills of a workforce

Which scenario best illustrates the law of diminishing marginal utility?

• A car breaks down more often as it gets older.

• A collector of china figurines is eager to get a new one.

• Someone who doesn't listen to music does not care about getting a new CD.

• A new toy is less exciting to a child with many toys than to a child with just a few.