Final Exam Review- Chapters 1-5

Economics is the study of how people

• choose from limited resources to meet their wants and needs.

• govern a country.

• gain knowledge and skills from studying.

• calculate their income.

Answer explanation

Economics studies how people deal with the issue of scarcity.

We all want more stuff than we have the resources to get. This concept is called

• Specialization

• Productivity

• Profit

• Scarcity

Answer explanation

Scarcity deals with the fact that there's a permanent lack of all the resources that people need to meet all their needs and wants.

Who's the "Father of Economics"?

• Friedrich Engels

• Vladimir Lenin

• Karl Marx

• Adam Smith

Answer explanation

Adam Smith was a Scottish philosopher who wrote "The Wealth of Nations" and popularized economics around the American Revolution.

The more we have of something, the less satisfaction we get from it. This is called what?

• Murphy's Law

• Opportunity Cost

• Microeconomics

• The Law of Diminishing Marginal Utility

Answer explanation

Think of the sixth slice of pizza vs. the first.

When a family decides to move to a different apartment, what type of economics is involved?

• Macroeconomics

• Microeconomics

• Reaganomics

• Nanoeconomoics

Answer explanation

This is a family's decision. Decisions for individuals, businesses, and families are microeconomic decisions.

When the government decides what income tax rate to assign to wealthy Americans, what type of economics is involved?

• Macroeconomics

• Microeconomics

• Nanoeconomics

• Reaganomics

Answer explanation

Macroeconomics involves the decisions that affect everyone within a particular system.

When people make choices, they give up something. The thing they give up is called what?

• Factor of Production

• Resources

• Opportunity Cost

• Efficiency

Answer explanation

Opportunity cost is your second best option- the thing you give up when making a choice.

What type of economic system do we use in America?

• Command Economy

• Traditional Economy

• Pure Market Economy

• Mixed Economy

Answer explanation

All economic systems today are really some form of mixed economies. America's system is primarily a market economy with some government involvement- "a mixed market economy".

Which of the following are the 3 Economic Questions that all societies must answer?

• What to Produce?

• How to Produce Stuff?

• When to Produce Stuff?

• Who Should Get the Stuff We Make?

Command Economies have been used in which of the following nations?

• Cuba

• North Korea

• The Soviet Union

• Viet Nam