ECON 103 FINAL EXAM - CHAPMAN ISU STUDY
GUIDE
Economics - Answers -The social science of how humans make decisions in the face of
scarcity.
Scarcity - Answers -Human wants for goods, services and resources exceed what is
available (limited)
Factors of Production - Answers -Land labor and capital (you don't always need
money); things that must be combined in order to produce a good or a service
Land - Answers -all natural resources used to produce goods and services
Labor - Answers -Human effort directed toward producing goods and services
Capital - Answers -Tools and equipment and machinery that help produce the goods
and services EX: Trucks
Division and Specialization of Labor - Answers -The way that production of a good or
service is divided into a number of tasks that different workers perform instead of all
tasks being done by the same person.
Gross Domestic Product (GDP) - Answers -The total dollar amount of all final goods
and services produced in a country in one year
Economies of Scale - Answers -The dropping of cost per unit to produce goods;
quantity from zero to Q
Constant Return to Scale - Answers -Constant rate of cost per unit to produce goods;
takes place at quantity Q
Diseconomies of Scale - Answers -The increasing of cost per unit to produce goods;
takes place at quantities after Q
Microeconomics - Answers -The actions of individual agents within the economy, like
households, workers and business firms
Macroeconomics - Answers -The economy as a whole such as growth and
unemployment
, Monetary Policy - Answers -conducted by the countries central bank manipulates the
money supply interest rates or banking regulation to achieve an economic goal
Fiscal Policy - Answers -economic policies that involve government spending and
taxes, any level of government, taxing people or spending
Traditional Economy - Answers -what you produce is what you consume
Command Economy - Answers -economic decisions are passed down from
government authority and where the government owns resources (factors of production)
Market (Capitalist) Economy - Answers -Economic decisions are decentralized private
individuals own resources and businesses supply goods and services based on
demand
Underground Economy (Black Market) - Answers -A market where the buyers and
sellers make transactions in violation of one or more government regulations
Export - Answers -a product that is produced in the US and sold abroad
Import - Answers -the goods and services that one produces abroad and then sells
them domestically
Opportunity Cost - Answers -the best alternative forgone
Utility - Answers -The satisfaction or happiness gained from consuming a product
Marginal - Answers -- Incremental Changes
- A little more a little less of something
- An increase or decrease in one unit
Marginal Analysis - Answers -Examine the decisions of incremental change
Law of Diminishing Marginal Utility - Answers -Shows the general pattern of higher
levels of happiness for the first few units consumed compared to the last few units
consumed
Sunk Cost - Answers -costs that were incurred in the past and cannot be recovered,
should not affect the current decision
Role of Assumption - Answers -Simplify the theory
The Production Possibility Frontier - Answers -- The efficient use of resources, points
beyond the PPF are unattainable and points inside the PPF are inefficient
- A tradeoff between two goods (or services) that could be produced
GUIDE
Economics - Answers -The social science of how humans make decisions in the face of
scarcity.
Scarcity - Answers -Human wants for goods, services and resources exceed what is
available (limited)
Factors of Production - Answers -Land labor and capital (you don't always need
money); things that must be combined in order to produce a good or a service
Land - Answers -all natural resources used to produce goods and services
Labor - Answers -Human effort directed toward producing goods and services
Capital - Answers -Tools and equipment and machinery that help produce the goods
and services EX: Trucks
Division and Specialization of Labor - Answers -The way that production of a good or
service is divided into a number of tasks that different workers perform instead of all
tasks being done by the same person.
Gross Domestic Product (GDP) - Answers -The total dollar amount of all final goods
and services produced in a country in one year
Economies of Scale - Answers -The dropping of cost per unit to produce goods;
quantity from zero to Q
Constant Return to Scale - Answers -Constant rate of cost per unit to produce goods;
takes place at quantity Q
Diseconomies of Scale - Answers -The increasing of cost per unit to produce goods;
takes place at quantities after Q
Microeconomics - Answers -The actions of individual agents within the economy, like
households, workers and business firms
Macroeconomics - Answers -The economy as a whole such as growth and
unemployment
, Monetary Policy - Answers -conducted by the countries central bank manipulates the
money supply interest rates or banking regulation to achieve an economic goal
Fiscal Policy - Answers -economic policies that involve government spending and
taxes, any level of government, taxing people or spending
Traditional Economy - Answers -what you produce is what you consume
Command Economy - Answers -economic decisions are passed down from
government authority and where the government owns resources (factors of production)
Market (Capitalist) Economy - Answers -Economic decisions are decentralized private
individuals own resources and businesses supply goods and services based on
demand
Underground Economy (Black Market) - Answers -A market where the buyers and
sellers make transactions in violation of one or more government regulations
Export - Answers -a product that is produced in the US and sold abroad
Import - Answers -the goods and services that one produces abroad and then sells
them domestically
Opportunity Cost - Answers -the best alternative forgone
Utility - Answers -The satisfaction or happiness gained from consuming a product
Marginal - Answers -- Incremental Changes
- A little more a little less of something
- An increase or decrease in one unit
Marginal Analysis - Answers -Examine the decisions of incremental change
Law of Diminishing Marginal Utility - Answers -Shows the general pattern of higher
levels of happiness for the first few units consumed compared to the last few units
consumed
Sunk Cost - Answers -costs that were incurred in the past and cannot be recovered,
should not affect the current decision
Role of Assumption - Answers -Simplify the theory
The Production Possibility Frontier - Answers -- The efficient use of resources, points
beyond the PPF are unattainable and points inside the PPF are inefficient
- A tradeoff between two goods (or services) that could be produced
