ECON 201 FINAL UNIVERSITY OF OREGON QUESTIONS WITH CORRECT ANSWERS

Capitalism


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system in which property and the means of production are privately owned

,Causes of High/Low elasticity


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-the fraction of income spent on the good
-the availability of close substitutes
-the unit of time,




How to solve the problem of Common Resources


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-introduce some sort of excludability
-government could ban any use
-government could license use or give it all to one party who will want to
consume it at the socially optimal level




How can we solve Information Asymmetrics?


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-guarantees
-warranties
-certification
-experts
-reputation
-liability laws

, Asymmetric Information


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occurs when the buyer and seller don't have the same information about
the product
Ex:
-used cars
-hope repair
-health care




Production Possibilities Frontier


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is a graph representation of the economy of possible production choices
Ex: farmer can plant either soy or corn




Inputs


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factors of production are anything which contribute to production
-capital (machines/equipment)
-labor (work/workers)
-land and natural resources




Marginal Value