Econ Final Spring 2024

Why might some historians consider Adam Smith one of the most influential people in history?

• He taught that all people should be economic equals.

• He introduced a way of thinking about economic ideas.

• He argued for a larger role for the government in the economy.

• He wrote the economic argument for American independence.

Which of these statements is an example of normative economics?

• Taxes ought to be lowered.

• Inflation is higher this year

• The bond market is in decline

• Speculation caused a recession

Which of these terms is most closely related to tradeoffs

• incentives

• margin

• markets

• scarcity

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

• working life

• chief competitors

• anticipated benefits

• required maintenance

Which statement is the best example of thinking at the margin?

• John has six shirts and is trying to decide whether to buy a seventh

• Mary observes that the average cost of shoes is higher than last year.

• David decides to volunteer this summer instead of working for pay.

• Jane wants to buy a car but decides she cannot afford the insurance.

Which of the following is not a market?

• an online auction site

• a large appliance store

• a high school classroom

• a neighborhood garage sale

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 is the law of unintended consequences?

• Attempts to intervene always backfire

• Actions often have unforeseen effects

• Markets are always influenced by emotional

• . Economic booms are always followed by downturns.

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

• scarcity

• shortages

• marginal utility

• costs of production

What are the factors of production?

• goods and services

• risk and opportunity

• land, labor, and capital

• wages, salaries, and profits