EKN 110 FINAL EXAM STUDY GUIDE: CHAPTERS 1-10
QUESTIONS AND ANSWERS
Scarcity - CORRECT ANSWER✔✔Limited resources versus unlimited human wants.
Opportunity Cost - CORRECT ANSWER✔✔Value of the next best alternative forgone.
Market Economy - CORRECT ANSWER✔✔Private ownership and decentralized decision-making.
Command Economy - CORRECT ANSWER✔✔Centralized decision-making by the government.
Mixed Economy - CORRECT ANSWER✔✔Combination of market and command economic systems.
Basic Economic Questions - CORRECT ANSWER✔✔What, how, and for whom to produce?
Purposeful Behavior - CORRECT ANSWER✔✔Decisions made to maximize utility or profit.
Marginal Analysis - CORRECT ANSWER✔✔Comparison of marginal benefits and costs.
Macroeconomics - CORRECT ANSWER✔✔Study of the economy as a whole.
Microeconomics - CORRECT ANSWER✔✔Study of individual economic units.
Positive Economics - CORRECT ANSWER✔✔Factual statements about economic phenomena.
Normative Economics - CORRECT ANSWER✔✔Value judgments about economic policies.
Production Possibilities Curve (PPC) - CORRECT ANSWER✔✔Illustrates maximum production
combinations of two goods.
,Assumptions of PPC - CORRECT ANSWER✔✔Fixed resources, full employment, fixed technology.
Scarcity in PPC - CORRECT ANSWER✔✔Boundary of the curve represents unattainable points.
Choice in PPC - CORRECT ANSWER✔✔Movement between points on the curve.
Opportunity Cost in PPC - CORRECT ANSWER✔✔Amount sacrificed to produce an additional unit.
Law of Increasing Opportunity Costs - CORRECT ANSWER✔✔Higher production costs for additional units
of goods.
Full Employment - CORRECT ANSWER✔✔All resources are utilized in production.
Productive Efficiency - CORRECT ANSWER✔✔Maximizing output with given resources.
Economic Systems - CORRECT ANSWER✔✔Frameworks for resource allocation and decision-making.
Graphical Representations - CORRECT ANSWER✔✔Visual tools for understanding economic concepts.
Economic Growth - CORRECT ANSWER✔✔Outward PPC shift from resources or technology increase.
Unemployment/Inefficiency - CORRECT ANSWER✔✔Points inside PPC indicating underutilized
resources.
Plotting Data Points - CORRECT ANSWER✔✔Graphically representing economic data values.
Direct Relationship - CORRECT ANSWER✔✔Variables move together; graph slopes upwards.
, Inverse Relationship - CORRECT ANSWER✔✔Variables move oppositely; graph slopes downwards.
Independent Variable - CORRECT ANSWER✔✔Cause of change, plotted on horizontal axis.
Dependent Variable - CORRECT ANSWER✔✔Effect of change, plotted on vertical axis.
Ceteris Paribus - CORRECT ANSWER✔✔Assumes other factors constant in analysis.
Slope of a Line - CORRECT ANSWER✔✔Change in vertical over horizontal distance.
Positive Slope - CORRECT ANSWER✔✔Indicates upward trend in graph.
Negative Slope - CORRECT ANSWER✔✔Indicates downward trend in graph.
Infinite Slope - CORRECT ANSWER✔✔Vertical line; quantity constant regardless of price.
Zero Slope - CORRECT ANSWER✔✔Horizontal line; price constant regardless of quantity.
Equation of a Straight Line - CORRECT ANSWER✔✔y=a+bx defines linear relationships.
Dependent Variable (y) - CORRECT ANSWER✔✔Value determined by independent variable (x).
Independent Variable (x) - CORRECT ANSWER✔✔Value that influences dependent variable (y).
Vertical Intercept (a) - CORRECT ANSWER✔✔Value of y when x equals zero.
Slope (b) - CORRECT ANSWER✔✔Rate of change of y with respect to x.
QUESTIONS AND ANSWERS
Scarcity - CORRECT ANSWER✔✔Limited resources versus unlimited human wants.
Opportunity Cost - CORRECT ANSWER✔✔Value of the next best alternative forgone.
Market Economy - CORRECT ANSWER✔✔Private ownership and decentralized decision-making.
Command Economy - CORRECT ANSWER✔✔Centralized decision-making by the government.
Mixed Economy - CORRECT ANSWER✔✔Combination of market and command economic systems.
Basic Economic Questions - CORRECT ANSWER✔✔What, how, and for whom to produce?
Purposeful Behavior - CORRECT ANSWER✔✔Decisions made to maximize utility or profit.
Marginal Analysis - CORRECT ANSWER✔✔Comparison of marginal benefits and costs.
Macroeconomics - CORRECT ANSWER✔✔Study of the economy as a whole.
Microeconomics - CORRECT ANSWER✔✔Study of individual economic units.
Positive Economics - CORRECT ANSWER✔✔Factual statements about economic phenomena.
Normative Economics - CORRECT ANSWER✔✔Value judgments about economic policies.
Production Possibilities Curve (PPC) - CORRECT ANSWER✔✔Illustrates maximum production
combinations of two goods.
,Assumptions of PPC - CORRECT ANSWER✔✔Fixed resources, full employment, fixed technology.
Scarcity in PPC - CORRECT ANSWER✔✔Boundary of the curve represents unattainable points.
Choice in PPC - CORRECT ANSWER✔✔Movement between points on the curve.
Opportunity Cost in PPC - CORRECT ANSWER✔✔Amount sacrificed to produce an additional unit.
Law of Increasing Opportunity Costs - CORRECT ANSWER✔✔Higher production costs for additional units
of goods.
Full Employment - CORRECT ANSWER✔✔All resources are utilized in production.
Productive Efficiency - CORRECT ANSWER✔✔Maximizing output with given resources.
Economic Systems - CORRECT ANSWER✔✔Frameworks for resource allocation and decision-making.
Graphical Representations - CORRECT ANSWER✔✔Visual tools for understanding economic concepts.
Economic Growth - CORRECT ANSWER✔✔Outward PPC shift from resources or technology increase.
Unemployment/Inefficiency - CORRECT ANSWER✔✔Points inside PPC indicating underutilized
resources.
Plotting Data Points - CORRECT ANSWER✔✔Graphically representing economic data values.
Direct Relationship - CORRECT ANSWER✔✔Variables move together; graph slopes upwards.
, Inverse Relationship - CORRECT ANSWER✔✔Variables move oppositely; graph slopes downwards.
Independent Variable - CORRECT ANSWER✔✔Cause of change, plotted on horizontal axis.
Dependent Variable - CORRECT ANSWER✔✔Effect of change, plotted on vertical axis.
Ceteris Paribus - CORRECT ANSWER✔✔Assumes other factors constant in analysis.
Slope of a Line - CORRECT ANSWER✔✔Change in vertical over horizontal distance.
Positive Slope - CORRECT ANSWER✔✔Indicates upward trend in graph.
Negative Slope - CORRECT ANSWER✔✔Indicates downward trend in graph.
Infinite Slope - CORRECT ANSWER✔✔Vertical line; quantity constant regardless of price.
Zero Slope - CORRECT ANSWER✔✔Horizontal line; price constant regardless of quantity.
Equation of a Straight Line - CORRECT ANSWER✔✔y=a+bx defines linear relationships.
Dependent Variable (y) - CORRECT ANSWER✔✔Value determined by independent variable (x).
Independent Variable (x) - CORRECT ANSWER✔✔Value that influences dependent variable (y).
Vertical Intercept (a) - CORRECT ANSWER✔✔Value of y when x equals zero.
Slope (b) - CORRECT ANSWER✔✔Rate of change of y with respect to x.
