ECON 102 FINAL EXAM DANIEL GOLDSTEIN
trade-off - Answers -the act of giving up one benefit in order to gain another, greater
benefit
opportunity cost - Answers -highest-valued alternative that must be given up to engage
in that activity
market - Answers -a group of buyers and sellers of a particular good or service
marginal analysis - Answers -analysis that involves comparing marginal benefits and
marginal costs
centrally planned economy - Answers -government decides how economic resources
will be allocated
market economy - Answers -decisions of households and firms interacting in markets
allocate economic resources
mixed economy - Answers -market-based economic system with limited government
involvement
productive efficiency - Answers -a situation in which a good or service is produced at
the lowest possible cost
allocative efficiency - Answers -when production is in accordance with consumer
preferences
voluntary exchange - Answers -both the buyer and the seller of a product are made
better off by the transaction
equity - Answers -equal distribution of economic benefits
economic models - Answers -simplified versions of reality used to analyze real-world
economic situations
economic variable - Answers -something measurable that can have different values
positive analysis - Answers -concerned with what is
normative analysis - Answers -concerned with what ought to be
microeconomics - Answers -the study of how households and firms make decisions
and how they interact in markets
, absolute advantage - Answers -the ability to produce more of a given product using a
given amount of resources
circular flow diagram - Answers -a model that illustrates how participants in product
markets and factor markets are linked
comparative advantage - Answers -the ability to produce a good at the lowest
opportunity cost
economic growth - Answers -the ability of the economy to increase the production of
goods and services
entrepreneur - Answers -a person who organizes and operates a business or
businesses
factor market - Answers -market in which firms purchase the factors of production from
households
factors of production - Answers -land, labor, capital, entrepreneurship
free market - Answers -government does not control the production of goods and
services, changes in prices lead firms to produce the goods and services most desired
by consumers
product market - Answers -markets for goods and services (such as computers +
medical treatments)
PPF (Production Possibilities Frontier) - Answers -a curve that shows the maximum
attainable combinations of two goods that can be produced with available resources
property rights - Answers -the rights individuals or firms have to use their property,
including the right to buy or sell it
trade - Answers -the action of buying and selling goods and services
Ceteris Paribus - Answers -all other things held constant
competitive market equilibrium - Answers -a market equilibrium with many buyers and
sellers
complements - Answers -goods that are used together
substitutes - Answers -goods used in place of one another
demand curve - Answers -a curve that shows the relationship between the price of a
product and the quantity of the product demanded
trade-off - Answers -the act of giving up one benefit in order to gain another, greater
benefit
opportunity cost - Answers -highest-valued alternative that must be given up to engage
in that activity
market - Answers -a group of buyers and sellers of a particular good or service
marginal analysis - Answers -analysis that involves comparing marginal benefits and
marginal costs
centrally planned economy - Answers -government decides how economic resources
will be allocated
market economy - Answers -decisions of households and firms interacting in markets
allocate economic resources
mixed economy - Answers -market-based economic system with limited government
involvement
productive efficiency - Answers -a situation in which a good or service is produced at
the lowest possible cost
allocative efficiency - Answers -when production is in accordance with consumer
preferences
voluntary exchange - Answers -both the buyer and the seller of a product are made
better off by the transaction
equity - Answers -equal distribution of economic benefits
economic models - Answers -simplified versions of reality used to analyze real-world
economic situations
economic variable - Answers -something measurable that can have different values
positive analysis - Answers -concerned with what is
normative analysis - Answers -concerned with what ought to be
microeconomics - Answers -the study of how households and firms make decisions
and how they interact in markets
, absolute advantage - Answers -the ability to produce more of a given product using a
given amount of resources
circular flow diagram - Answers -a model that illustrates how participants in product
markets and factor markets are linked
comparative advantage - Answers -the ability to produce a good at the lowest
opportunity cost
economic growth - Answers -the ability of the economy to increase the production of
goods and services
entrepreneur - Answers -a person who organizes and operates a business or
businesses
factor market - Answers -market in which firms purchase the factors of production from
households
factors of production - Answers -land, labor, capital, entrepreneurship
free market - Answers -government does not control the production of goods and
services, changes in prices lead firms to produce the goods and services most desired
by consumers
product market - Answers -markets for goods and services (such as computers +
medical treatments)
PPF (Production Possibilities Frontier) - Answers -a curve that shows the maximum
attainable combinations of two goods that can be produced with available resources
property rights - Answers -the rights individuals or firms have to use their property,
including the right to buy or sell it
trade - Answers -the action of buying and selling goods and services
Ceteris Paribus - Answers -all other things held constant
competitive market equilibrium - Answers -a market equilibrium with many buyers and
sellers
complements - Answers -goods that are used together
substitutes - Answers -goods used in place of one another
demand curve - Answers -a curve that shows the relationship between the price of a
product and the quantity of the product demanded
