Final Exam Study Guide Part 1

What is scarcity in economics?

• A temporary shortage of goods

• A basic, permanent condition that exists because unlimited wants exceed limited productive resources

• The abundance of resources

• The result of government intervention

(a)   is NOT a strategy for allocating scarce resources.

• Price
• Majority rule
• Unlimited supply
• Lottery

Which of the following is considered a productive resource?

• Natural resources

• Entertainment

• Fashion trends

• Social media

Opportunity cost is the (a)   next best alternative.

• The total cost of all alternatives
• The forgone next best alternative
• The price paid for a product
• The amount of money saved

Rational decision-making occurs when:

• Marginal costs exceed marginal benefits

• Marginal benefits equal or exceed marginal costs

• All options are free

• Only one choice is available

How do individuals, businesses, and governments typically respond to incentives?

• In unpredictable ways

• In predictable ways

• By ignoring them

• By always refusing them

Which economic system answers the three basic economic questions through government planning?

• Market economy

• Command economy

• Mixed economy

• Traditional economy

Match the following roles with their descriptions in a mixed economic system.

• Role of government in abolishing ownership rights of individuals

• Eliminating all private property

• Role of government in ensuring essential services are available to all citizens

• Providing public goods and services

• Role of government in controlling the economy by determining the cost of goods and services

• Ignoring market failures

• Role of government in neglecting to address inefficiencies in the market

• Setting all prices

Which of the following is a social and economic goal prioritized by economic systems?

• Fashion

• Security

• Popularity

• Entertainment

One way governments can protect consumers is by (a)  

• By providing consumer protections
• By eliminating all regulations
• By reducing public goods
• By increasing market failures