Final Economic Exam

Apply the economic term "scarcity"

• Scarcity is the limited availability of resources to meet unlimited wants.
• Scarcity refers to the abundance of resources available.
• Scarcity is the ability to meet all wants without limitations.
• Scarcity is a measure of wealth in an economy.

Identify the factor of capital

• Labor costs associated with production.
• Government regulations affecting production.
• Financial resources and assets used in production.
• Market demand for goods and services.

Definition of the term "Marginal Benefit"

• Marginal Benefit is the total cost of producing a good or service.
• Marginal Benefit refers to the overall satisfaction from all units consumed.
• Marginal Benefit is the additional benefit received from consuming one more unit of a good or service.
• Marginal Benefit is the decrease in utility from consuming less of a good.

Identify negative incentives

• Penalties, fines, loss of privileges
• Rewards for good behavior
• Incentives for participation
• Bonuses for achievements

What is specialization?

• Specialization is the process of avoiding focus on any particular area.
• Specialization refers to the general study of various subjects.
• Specialization is the act of diversifying skills across multiple fields.
• Specialization is the process of concentrating on a specific area of work or study.

Which resource allocation methods are most often used in a free market economy?

• Government regulation
• Random distribution
• Supply and demand
• Fixed pricing

The effect of education on income

• Higher education has no impact on income.
• Lower education guarantees higher income.
• Education decreases earning potential.
• Higher education typically leads to higher income.

Which economic system would best meet the goals of economic freedom, growth, and efficiency?

• Planned economy
• Barter system
• Socialist economy
• Market economy

Government role in a Market Economy?

• The government has no role in a market economy.
• The government regulates, protects, and stabilizes the market economy.
• The government only controls prices in a market economy.
• The government solely focuses on taxation in a market economy.

Weaknesses of a Command Economy

• High efficiency
• Inefficiency, limited choices, potential for corruption, and poor responsiveness to demand.
• Abundant choices
• Strong market competition