ICCC Macro UPDATED FINAL EXAM QUESTIONS
AND CORRECT ANSWERS
Scarcity - CORRECT ANSWERS permanent economic condition based on unlimited wants
and limited resources
production possibilities frontier/curve - CORRECT ANSWERS Shows the maximum feasible
combinations of two goods or services that a society can produce, assuming all resources are
used in their most productive manner
positive economics - CORRECT ANSWERS the branch of economic analysis that describes
the way the economy actually works
normative economics - CORRECT ANSWERS The part of economics involving value
judgments about what the economy should be like; focused on which economic goals and
policies should be implemented; policy economics.
why do economists disagree - CORRECT ANSWERS 1. scientific judgements
2. values
3. perception vs reality
circular flow diagram - CORRECT ANSWERS a visual model of the economy that shows
how dollars flow through markets among households and firms, households buy products and
firms buy factors of production
opportunity cost - CORRECT ANSWERS Cost of the next best alternative use of money,
time, or resources when one choice is made rather than another
, market economy - CORRECT ANSWERS economic system in which decisions on production
and consumption of goods and services are based on voluntary exchange in markets
competitive market - CORRECT ANSWERS a market in which there are many buyers and
many sellers so that each has a negligible impact on the market price
absolute advantage - CORRECT ANSWERS the ability of an individual, a firm, or a country
to produce more of a good or service than competitors, using the same amount of resources
comparative advantage - CORRECT ANSWERS the ability to produce a good at a lower
opportunity cost than another producer
specialization - CORRECT ANSWERS the concentration of the productive efforts of
individuals and firms on a limited number of activities
demand - CORRECT ANSWERS Consumer willingness and ability to buy products
change in demand - CORRECT ANSWERS a shift of the demand curve, which changes the
quantity demanded at any given price
supply - CORRECT ANSWERS The quantity of something that producers have available for
sale
change in supply - CORRECT ANSWERS a shift of the supply curve, which changes the
quantity supplied at any given price
market equilibrium - CORRECT ANSWERS condition of price stability where the quantity
demanded equals the quantity supplied
AND CORRECT ANSWERS
Scarcity - CORRECT ANSWERS permanent economic condition based on unlimited wants
and limited resources
production possibilities frontier/curve - CORRECT ANSWERS Shows the maximum feasible
combinations of two goods or services that a society can produce, assuming all resources are
used in their most productive manner
positive economics - CORRECT ANSWERS the branch of economic analysis that describes
the way the economy actually works
normative economics - CORRECT ANSWERS The part of economics involving value
judgments about what the economy should be like; focused on which economic goals and
policies should be implemented; policy economics.
why do economists disagree - CORRECT ANSWERS 1. scientific judgements
2. values
3. perception vs reality
circular flow diagram - CORRECT ANSWERS a visual model of the economy that shows
how dollars flow through markets among households and firms, households buy products and
firms buy factors of production
opportunity cost - CORRECT ANSWERS Cost of the next best alternative use of money,
time, or resources when one choice is made rather than another
, market economy - CORRECT ANSWERS economic system in which decisions on production
and consumption of goods and services are based on voluntary exchange in markets
competitive market - CORRECT ANSWERS a market in which there are many buyers and
many sellers so that each has a negligible impact on the market price
absolute advantage - CORRECT ANSWERS the ability of an individual, a firm, or a country
to produce more of a good or service than competitors, using the same amount of resources
comparative advantage - CORRECT ANSWERS the ability to produce a good at a lower
opportunity cost than another producer
specialization - CORRECT ANSWERS the concentration of the productive efforts of
individuals and firms on a limited number of activities
demand - CORRECT ANSWERS Consumer willingness and ability to buy products
change in demand - CORRECT ANSWERS a shift of the demand curve, which changes the
quantity demanded at any given price
supply - CORRECT ANSWERS The quantity of something that producers have available for
sale
change in supply - CORRECT ANSWERS a shift of the supply curve, which changes the
quantity supplied at any given price
market equilibrium - CORRECT ANSWERS condition of price stability where the quantity
demanded equals the quantity supplied
