Economics Final Exam

Economics - ANSWER-the study of how people seek to satisfy their needs and wants by making choices Horizontal Merger - ANSWER-the combination of two or more firms competing in the same market with the same good or service Vertical Merger - ANSWER-the combination of two or more firms involved in different stages of producing the same good or service Shortage - ANSWER-a situation in which a good or service is unavailable Scarcity - ANSWER-limited quantities of resources to meet unlimited wants Factors of Production - ANSWER-land, labor, and capital; the three groups of resources that are used to make all goods and services Entrepreneur - ANSWER-ambitious leader who combines land, labor, and capital to create and market new goods or services Trade-Off - ANSWER-the alternative we sacrifice when we make a decision Opportunity Cost - ANSWER-the most desirable alternative given up as the result of a decision Human Capital - ANSWER-the skills and knowledge gained by a worker through education and experience Physical Capital - ANSWER-all human-made goods that are used to produce other goods and services; tools and buildings Thinking at the Margin - ANSWER-deciding whether to do or use one additional unit of some resource Production Possibility Graph - ANSWER-a graph that shows alternative ways to use an economy's resources Production Possibility Frontier - ANSWER-the line on a production possibilities graph that shows the maximum possible output for a specific economy Adam Smith - ANSWER-classic economist that believed the market could regulate itself Classical Economics - ANSWER-the idea that free markets can regulate themselves