ECON 201 Study Guide Exam Questions With Correct Answers

ECON 201 Study Guide Exam Questions With Correct Answers Efficiency - ANSWER when society gets the most from its scarce resources Equality - ANSWER when economic benefits are distributed uniformly across society If the US government lowers the income taxes on the wealthiest Americans, while decrease welfare payments to the poorest Americans - Efficiency/equality? - ANSWER Increase in efficiency Decrease in equality A person smoking in a restaurant emits second-hand smoke that harms other restaurant patrons - ANSWER externality A single grocery store is the only source of food in a small town, giving the store the ability to influence the price of food - ANSWER market power Productivity - ANSWER the amount of goods and services that can be produced for each unit of labor input Inflation and unemployment - ANSWER lower inflation leads to higher unemployment circular flow of economy - ANSWER households own all the factors of production comparative advantage - ANSWER the ability to produce a good at a lower opportunity cost than another producer perfectly competitive - ANSWER identical products and large number of buyers and sellers -sellers cannot influence the market price demand schedule - ANSWER table showing the relationship between the price of a good and the amount that buyers are willing and able to purchase at various prices law of demand - ANSWER with other things being equal, the quantity demanded of a good falls when the price of a good rises quantity demanded - ANSWER the amount of a good that buyers are willing and able to purchase at a given price demand curve - ANSWER a graphical object showing the relationship between the price of a good and the amount of the good that buyers are willing and able to purchase at various prices