ECO 201 UKY final exam Questions and Answers 100% Pass

ECO 201 UKY final exam Questions and Answers 100% Pass scarcity - limited resources and unlimited wants types of resources - land (water, air, oil, land, natural resources), nonhuman animal resources, labor (human capital: physical and mental), capital (resources produced using land + labor (man-made)), technology, entrepreneurial ability opportunity cost - Cost of the next best alternative use of money, time, or resources when one choice is made rather than another sunk cost - has already been incurred and can't be recovered economic decision rule - if the marginal (incremental) benefit of an action exceeds the marginal (incremental) cost, do it. If the MC>MB, don't do it. we do things to the point where MB = MC Invisible Handshake - social and historical forces and cultural norms that influence market outcomes EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 2 market forces - (supply and demand) ration goods and services by changing the price level invisible hand - is the price mechanism - it guides economic forces to coordinate actions and allocate resources a market-based economy does not imply the absence of government - answers the 3 economic questions, but government is needed to - - protect private property rights - law enforcement & judicial system - acts as referee in market command economy - an economy in which production, investment, prices, and incomes are determined centrally by a government externalities - economic side effects or by-products that affect an uninvolved third party; can be negative or positive market power - the ability of a single economic actor (or small group of actors) to have a substantial influence on market prices invisible foot - political and legal forces in the market influencing market outcomes Ex: illegal to sell babies, buy alcohol under 21 Invisible Handshake - social and historical forces and cultural norms that influence market outcomes EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 3 positive statement - can be tested and validated, proven or disproven; it describes "what is" normative statement - a statement of opinion, cannot be proven or disproven (key words: ought, should, good, bad) households - initial owners of factors of production and buy goods and services firms - buy factors of production from households and produce goods and services factor markets - buy and sell inputs used for produc