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ECON 202 Final exam study guide

Terms in this set (570)

The study of economics arises due to
scarcity
The basic economic problem of scarcity
has always existed and will continue to exist
Economics is the study of the ________ people make to attain their goals, given their ________ resources.
choices; scarce
The term "market" in economics refers to
a group of buyers and sellers of a product and the arrangement by which they come together to trade.
Economists assume that
optimal decisions are made at the margin
Consider the following statements:

a. Consumers rent more kayaks from a vendor that rents kayaks at a lower price than other rival
kayak vendors along Waikiki beach.

b. Department stores take steps to increase security since they believe it is more costly to allow
shoplifting than to install expensive security monitoring equipment.

c. Farmers produce more cotton when its selling price falls.

Which of the above statements demonstrates that economic agents respond to incentives?

You Answered
a and b
Trade-offs force society to make choices when answering what three fundamental questions?
What goods and services to produce; how will these goods and services be produced; and who receives them?
Which of the following statements is false?
Trade-offs do not apply when the consumers purchase a product for which there is excess supply, such as a stock clearance sale.
Opportunity cost is defined as
the highest valued alternative that must be given up to engage in an activity.
The Stogie Shop, a cigar store in the mall, sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each. What is the opportunity cost of buying a hand-rolled cigar?
4 machine-made cigars
Ted quits his $60,000-a-year job to be a stay-at-home dad. What is the opportunity cost of his decision?
at least $60,000
Who receives the goods and services produced in the United States depends largely on
how income is distributed.
In a market economy, who decides what goods and services will be produced?
consumers and producers
In a market economy, those who are willing and able to buy what is produced
receive the most of what is produced.
Economic models are
simple versions of reality
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