ECU ECON 2113 Final Exam Review | Economics Study Guide, Key Concepts & Practice
Questions (Okmyung Bin)
scarcity - ✔✔the fundamental economic problem; the gap between limited resources and
limitless wants
economics - ✔✔the study of the allocation of society's limited resources
What should be produced? How will they be produced? For whom will they be produced? -
✔✔three economic questions
trade-off - ✔✔decisions and sacrifices made to get a certain want/need
opportunity cost - ✔✔something that must be given up in order to obtain a particular good or
service
costs and benefits - ✔✔reasoning is used to make decisions using _____ ___ ________, based
on the premise that everything costs something.
incentives - ✔✔people respond to negative and positive __________ usually based on self-
interest
trade - ✔✔most nations do not have the resources or capacity to satisfy their own needs or
wants, therefore _____ is good for everyone
efficiency - ✔✔the optimal allocation of resources in society
equity - ✔✔fairness in economics
, market economy - ✔✔economic system based on free competition; prices are based on supply
and demand
invisible hand - ✔✔according to Adam Smith, an economy can work well in a free-market
economy when everyone works for their own interest
market failure - ✔✔allocation of goods and services is not efficient; the inability to reach
market equilibrium
scientific method - ✔✔economists use the __________ ______ to learn by reasoning, using
objective, logical, and systematic methods of analysis
assumptions and models - ✔✔make the world easier to understand; explain the world around
us
microeconomics - ✔✔study of economics at the individual, group, or company level
macroeconomics - ✔✔study of national economics as a whole
normative statement - ✔✔assertion about how the world ought to live
positive statement - ✔✔assertion about how the world actually is
circular flow model - ✔✔visual model of the economy that shows how dollars flow; shows flow
of input, output, and money through households and firms in the market
Questions (Okmyung Bin)
scarcity - ✔✔the fundamental economic problem; the gap between limited resources and
limitless wants
economics - ✔✔the study of the allocation of society's limited resources
What should be produced? How will they be produced? For whom will they be produced? -
✔✔three economic questions
trade-off - ✔✔decisions and sacrifices made to get a certain want/need
opportunity cost - ✔✔something that must be given up in order to obtain a particular good or
service
costs and benefits - ✔✔reasoning is used to make decisions using _____ ___ ________, based
on the premise that everything costs something.
incentives - ✔✔people respond to negative and positive __________ usually based on self-
interest
trade - ✔✔most nations do not have the resources or capacity to satisfy their own needs or
wants, therefore _____ is good for everyone
efficiency - ✔✔the optimal allocation of resources in society
equity - ✔✔fairness in economics
, market economy - ✔✔economic system based on free competition; prices are based on supply
and demand
invisible hand - ✔✔according to Adam Smith, an economy can work well in a free-market
economy when everyone works for their own interest
market failure - ✔✔allocation of goods and services is not efficient; the inability to reach
market equilibrium
scientific method - ✔✔economists use the __________ ______ to learn by reasoning, using
objective, logical, and systematic methods of analysis
assumptions and models - ✔✔make the world easier to understand; explain the world around
us
microeconomics - ✔✔study of economics at the individual, group, or company level
macroeconomics - ✔✔study of national economics as a whole
normative statement - ✔✔assertion about how the world ought to live
positive statement - ✔✔assertion about how the world actually is
circular flow model - ✔✔visual model of the economy that shows how dollars flow; shows flow
of input, output, and money through households and firms in the market
