ECON 2105 (UGA) Final Exam Review
(2025/2026) questions well answered
allocative efficiency - ANS ✔✔A state of the economy in which production is in accordance with
consumer preferences; in particular, every good or service is produced up to the point where
the last unit provides a marginal benefit to society equal to the marginal cost of producing it
productive efficiency - ANS ✔✔a situation in which a good or service is produced at the lowest
possible cost
equity - ANS ✔✔the fair distribution of economic benefits
factors of production - ANS ✔✔labor, capital, natural resources, and other INPUTS used to make
goods and services
scarcity - ANS ✔✔A situation in which unlimited wants exceed the limited resources available to
fulfill those wants
normal good - ANS ✔✔a good for which the demand increases as income rises and decreases as
income falls
complements - ANS ✔✔goods and services that are used together
inferior good - ANS ✔✔a good for which the demand increases as income falls and decreases as
income rises
, economics - ANS ✔✔the study of the choices people make to attain their goals, given their
scarce resources
Where does optimal decision making occur? - ANS ✔✔at the MARGIN (where marginal benefit
equals marginal cost)
market - ANS ✔✔a group of buyers and sellers of a good or service and the institution or
arrangement by which they come together to trade
rational decision making occurs when - ANS ✔✔people have used all available information and
have weighed all known benefits and costs
centrally planned economy - ANS ✔✔an economy in which the government decides how
economic resources will be allocated
market economy - ANS ✔✔an economy in which the decisions of households and firms
interacting in markets allocate economic resources
mixed economy - ANS ✔✔An economy in which most economic decisions result from the
interaction of buyers and sellers in markets but in which the government plays a significant role
in the allocation of resources.
opportunity cost - ANS ✔✔The highest-valued alternative that must be given up in order to
engage in an activity.
three economic questions that every society must answer - ANS ✔✔1.) What goods and
services will be produced?
2.) How will the goods and services be produced?
3.) Who will receive the goods and services produced?
(2025/2026) questions well answered
allocative efficiency - ANS ✔✔A state of the economy in which production is in accordance with
consumer preferences; in particular, every good or service is produced up to the point where
the last unit provides a marginal benefit to society equal to the marginal cost of producing it
productive efficiency - ANS ✔✔a situation in which a good or service is produced at the lowest
possible cost
equity - ANS ✔✔the fair distribution of economic benefits
factors of production - ANS ✔✔labor, capital, natural resources, and other INPUTS used to make
goods and services
scarcity - ANS ✔✔A situation in which unlimited wants exceed the limited resources available to
fulfill those wants
normal good - ANS ✔✔a good for which the demand increases as income rises and decreases as
income falls
complements - ANS ✔✔goods and services that are used together
inferior good - ANS ✔✔a good for which the demand increases as income falls and decreases as
income rises
, economics - ANS ✔✔the study of the choices people make to attain their goals, given their
scarce resources
Where does optimal decision making occur? - ANS ✔✔at the MARGIN (where marginal benefit
equals marginal cost)
market - ANS ✔✔a group of buyers and sellers of a good or service and the institution or
arrangement by which they come together to trade
rational decision making occurs when - ANS ✔✔people have used all available information and
have weighed all known benefits and costs
centrally planned economy - ANS ✔✔an economy in which the government decides how
economic resources will be allocated
market economy - ANS ✔✔an economy in which the decisions of households and firms
interacting in markets allocate economic resources
mixed economy - ANS ✔✔An economy in which most economic decisions result from the
interaction of buyers and sellers in markets but in which the government plays a significant role
in the allocation of resources.
opportunity cost - ANS ✔✔The highest-valued alternative that must be given up in order to
engage in an activity.
three economic questions that every society must answer - ANS ✔✔1.) What goods and
services will be produced?
2.) How will the goods and services be produced?
3.) Who will receive the goods and services produced?
