Final for Economics 2023 with 100% correct questions and answers

What is an economy? The wealth and resources of a country or region What is economics? It is the study of how people choose to use resources What are the three economic resources? Land, labor, and capital Name two of the three economic questions. What goods and services should be produced? How should these goods and services be produced? Who consumes these goods and services? Name two of the four general economic goals. Economic efficiency Economic freedom Economic security and predictability Economic equity Name two of the four economic systems. Traditional economies Market economies Command economies Mixed economies What is a traditional economy? Relies heavily on habit, custom, or ritual to decide what to produce and whom to distribute to What is a market economy? Where economic decisions are made by individuals and are based on exchange or trade What is a command economy? The central government alone decides how to answer all three economic questions What is a mixed economy? A market-based economic system in which the government plays a limited role What is the economic system in the United States? Capitalist economy Market economy What is a market? An arrangement that allows buyers and sellers to exchange things Why do markets exist? Because individuals cannot always be self-sufficient What do markets allow us to do? They allow us to exchange things for other things we want What is specialization? The concentration of productive efforts of individuals and firms on a limited number of activities What does specialization lead to? The efficient use of resources What is the free market economy based on? Voluntary exchanges What is competition? The struggle amongst producers for the dollars of consumers What keeps manufacturers are raising prices too high? Competition What is demand? The desire to own something and the ability to pay for it What is the law of demand? Consumers buy more of a good when its price decreases and less when its price increases What is the law of supply? An increase in price results in an increase in quantity supplied In order to meet the components of supply what two things must you have? Willingness to produce Ability to sell What is a fixed cost? It is a cost that does not change What are variable costs? They are costs that rise or fall depending on the quantity produced What is marginal cost? The cost of producing one more unit of a good What is an incentive? The hope for reward or fear of punishment that encourages a person to behave in a certain way What are the three types of incentives? Social, moral, economic What does it mean to maximize your utility? To maximize the total value derived from the available money What is the assumption of the model of supply and demand? Buyers and sellers have perfect information What incentives do buyers and sellers have? Buyers try to maximize profits; sellers try to maximize total satisfaction What is economic efficiency? Everyone is served in the best way What is information asymmetry? When in a transaction one party has more or better information than the other, creating an imbalance of power What is correlation? When two things go together What is causation? When one thing causes another What is a positive description? It uses descriptive, factual statements about the world What is normative description? It uses prescriptive, value-based statements What is the snob effect? Where a consumer may purchase a higher-priced brand of some item simply to demonstrate their social superiority to others What is the snob effect an example of? It's an exception to the law of demand