ECO 202- FINAL EXAM UPDATED QUESTIONS AND ANSWERS
Command Economy - CORRECT ANSWER✅✅✅-government tells you what to do
-shortage/surplus (resulting in market failure)
ex. North Korea
Market Economy - CORRECT ANSWER✅✅✅-decisions on production/consumption made by
consumers/producers
-pollution harming health (a market failure)
-are more efficient
Invisible Hand - CORRECT ANSWER✅✅✅(market economy related)
-individual self interest guides behavior and can lead to good results for society as a whole
Free Market - CORRECT ANSWER✅✅✅-rare
-many buyers/many sellers
-free entry/exit
-ex. singapore
Mixed Economy - CORRECT ANSWER✅✅✅-market+command
-welfare states ex. US, Canada
-gov. regulates but doesn't completely override
Scarcity - CORRECT ANSWER✅✅✅-the limited nature of resources (land, labor, human ability, and
physical ability)
-because of it we need to make tradeoffs
Opportunity Cost - CORRECT ANSWER✅✅✅-the next best thing you could have done
-highest value alternative of engaging in any activity
-what you must give up to get it
, -ex. Audi vs. College
Binary Choices - CORRECT ANSWER✅✅✅-either/or
-all or nothing
Marginal - CORRECT ANSWER✅✅✅-additional
Marginal Benefit - CORRECT ANSWER✅✅✅the happiness (utility from one more)
Marginal Cost - CORRECT ANSWER✅✅✅the unhappiness (cost) we get from one more
Marginal analysis - CORRECT ANSWER✅✅✅how we make choices
Tradeoffs - CORRECT ANSWER✅✅✅comparing costs+benefits
Incentive - CORRECT ANSWER✅✅✅an opportunity to make oneself better off
Trade - CORRECT ANSWER✅✅✅agents provide goods/service to others in the market in exchange
for goods/service
Equilibrium - CORRECT ANSWER✅✅✅-no individual would be better off by doing something
different
-markets move to equilibrium because people follow incentives
-QS=QD
Pareto Opportunity - CORRECT ANSWER✅✅✅an economy is efficient if all opportunities are utilized
to make everyone better off without making anyone worse off
Equity - CORRECT ANSWER✅✅✅focuses on fairness
Command Economy - CORRECT ANSWER✅✅✅-government tells you what to do
-shortage/surplus (resulting in market failure)
ex. North Korea
Market Economy - CORRECT ANSWER✅✅✅-decisions on production/consumption made by
consumers/producers
-pollution harming health (a market failure)
-are more efficient
Invisible Hand - CORRECT ANSWER✅✅✅(market economy related)
-individual self interest guides behavior and can lead to good results for society as a whole
Free Market - CORRECT ANSWER✅✅✅-rare
-many buyers/many sellers
-free entry/exit
-ex. singapore
Mixed Economy - CORRECT ANSWER✅✅✅-market+command
-welfare states ex. US, Canada
-gov. regulates but doesn't completely override
Scarcity - CORRECT ANSWER✅✅✅-the limited nature of resources (land, labor, human ability, and
physical ability)
-because of it we need to make tradeoffs
Opportunity Cost - CORRECT ANSWER✅✅✅-the next best thing you could have done
-highest value alternative of engaging in any activity
-what you must give up to get it
, -ex. Audi vs. College
Binary Choices - CORRECT ANSWER✅✅✅-either/or
-all or nothing
Marginal - CORRECT ANSWER✅✅✅-additional
Marginal Benefit - CORRECT ANSWER✅✅✅the happiness (utility from one more)
Marginal Cost - CORRECT ANSWER✅✅✅the unhappiness (cost) we get from one more
Marginal analysis - CORRECT ANSWER✅✅✅how we make choices
Tradeoffs - CORRECT ANSWER✅✅✅comparing costs+benefits
Incentive - CORRECT ANSWER✅✅✅an opportunity to make oneself better off
Trade - CORRECT ANSWER✅✅✅agents provide goods/service to others in the market in exchange
for goods/service
Equilibrium - CORRECT ANSWER✅✅✅-no individual would be better off by doing something
different
-markets move to equilibrium because people follow incentives
-QS=QD
Pareto Opportunity - CORRECT ANSWER✅✅✅an economy is efficient if all opportunities are utilized
to make everyone better off without making anyone worse off
Equity - CORRECT ANSWER✅✅✅focuses on fairness
