Econ 2110 Final Exam Clemson
University | Actual study | Questions and
verified Answers
Economics - ANSW-the study of how people allocate their limited resources to satisfy their nearly
unlimited wants
Micro - ANSW-the part of economics concerned with single factors and the effects of individual decisions
Macro - ANSW-the part of economics concerned with large scale or general economic factors, such as
interest rates and national productivity
Incentives - ANSW-rewards r punishments that people react to
Scarcity - ANSW-living in a world of finite resources and having unlimited needs and wants
Trade-offs - ANSW-giving up one thing in order to gain another
Opportunity Cost - ANSW-the value of the next best decision, what it costs someone to produce
something, loss of potential gain of other alternatives
Thinking on Margin - ANSW-what a producer/seller has to sacrifice in order to sell/produce one more of
an item
Positive Economics - ANSW-hows the economy actually works, facts
Normative Economics - ANSW-an opinion of how the economy should work, not facts
Consumer Surplus - ANSW-willingness to pay minus the cost/actual price of item
Producer Surplus - ANSW-the cost/actual price of item minus the production cost
Voluntary Trade - ANSW-trade that is mutually beneficial
Specialization - ANSW-leads to increased productivity and the division of knowledge
Self-Sufficiency - ANSW-leads to death
Division of Knowledge - ANSW-the sum of total knowledge increases and in this way so does productivity
Absolute Advantage - ANSW-when and individual or country can produce a good using fewer resources
Comparative Advantage - ANSW-When and individual or country can produce a good at a lower
opportunity cost
PPF - ANSW-graphical representation of a combination of goods that an individual or country can
produce
PPF Efficiency - ANSW-on line is efficient
above the line is unattainable
below the line is inefficient
Direct Cost - ANSW-price that can be completely attributed to the production of specific goods or
services
Indirect Cost - ANSW-cost not directly related to production
Explicit Cost - ANSW-direct payment made to others in the course of running a business
Demand - ANSW-the relationship between the price of a good and the quantity demanded
Supply - ANSW-as the price of a good rises, the quantity supplied also rises
, Equilibrium - ANSW-when the quantity demanded equals the quantity supplied
Surplus - ANSW-when the quantity supplied is greater than the quantity demanded
Shortage - ANSW-when the quantity demanded is greater than the quantity supplied
Inelastic - ANSW-when the elasticity of demand is less than -1 (greater than one absolute value)
Elastic - ANSW-when the elasticity of demand is between -1 and 0 (between 0 ad 1 in absolute value)
Unit elastic - ANSW-when the elasticity of demand is exactly -1 (exactly 1 in absolute value)
Perfectly Elastic Curve - ANSW-horizontal
Perfectly Inelastic Curve - ANSW-vertical
Elasticity of Demand - ANSW-how responsive the quantity demanded is to a change in price. the more
responsive, the more elastic
Revenue - ANSW-price * quantity
What makes a product more elastic? - ANSW-number of substitutes
necessity vs luxury
time
good classifications
budget share
Substitutes - ANSW-more substitutes = more elastic
Luxury vs. Necessity - ANSW-necessities are more inelastic
luxury goods are more elastic
Time (Elasticity of Demand) - ANSW-short run: less elastic
long run: more elastic
Budget Share (Elasticity of Demand) - ANSW-the more money allocated from your budget to a product,
the more elastic the product is
Elasticity of Supply - ANSW-measures the responsiveness of a quantity supplied to a change in price
Price Controls - ANSW-attempt to set or manipulate prices through government involvement in the
market
Price Ceiling - ANSW-maximum price a good can legally be bought or sold for
ex. rent control
Price Floor - ANSW-minimum price a good can legally be bought or sold for
ex. minimum wage
Binding price ceilings lead to... - ANSW-shortages
Externalities - ANSW-when individuals don't consider the costs or benefits of their actions on others
Positive Externalities - ANSW-Benefits received by people other than the producers or consumers in the
market
Negative Externalities - ANSW-people that aren't the producer or consumer pay (social cost)
Lack of Property Rights - ANSW-externalities occur because property rights have not been clearly defined
Commodity Tax - ANSW-tax on goods like fuel, liquor and cigarettes
Commodity Tax Effect - ANSW-government can tax consumers or producers with the same effect
University | Actual study | Questions and
verified Answers
Economics - ANSW-the study of how people allocate their limited resources to satisfy their nearly
unlimited wants
Micro - ANSW-the part of economics concerned with single factors and the effects of individual decisions
Macro - ANSW-the part of economics concerned with large scale or general economic factors, such as
interest rates and national productivity
Incentives - ANSW-rewards r punishments that people react to
Scarcity - ANSW-living in a world of finite resources and having unlimited needs and wants
Trade-offs - ANSW-giving up one thing in order to gain another
Opportunity Cost - ANSW-the value of the next best decision, what it costs someone to produce
something, loss of potential gain of other alternatives
Thinking on Margin - ANSW-what a producer/seller has to sacrifice in order to sell/produce one more of
an item
Positive Economics - ANSW-hows the economy actually works, facts
Normative Economics - ANSW-an opinion of how the economy should work, not facts
Consumer Surplus - ANSW-willingness to pay minus the cost/actual price of item
Producer Surplus - ANSW-the cost/actual price of item minus the production cost
Voluntary Trade - ANSW-trade that is mutually beneficial
Specialization - ANSW-leads to increased productivity and the division of knowledge
Self-Sufficiency - ANSW-leads to death
Division of Knowledge - ANSW-the sum of total knowledge increases and in this way so does productivity
Absolute Advantage - ANSW-when and individual or country can produce a good using fewer resources
Comparative Advantage - ANSW-When and individual or country can produce a good at a lower
opportunity cost
PPF - ANSW-graphical representation of a combination of goods that an individual or country can
produce
PPF Efficiency - ANSW-on line is efficient
above the line is unattainable
below the line is inefficient
Direct Cost - ANSW-price that can be completely attributed to the production of specific goods or
services
Indirect Cost - ANSW-cost not directly related to production
Explicit Cost - ANSW-direct payment made to others in the course of running a business
Demand - ANSW-the relationship between the price of a good and the quantity demanded
Supply - ANSW-as the price of a good rises, the quantity supplied also rises
, Equilibrium - ANSW-when the quantity demanded equals the quantity supplied
Surplus - ANSW-when the quantity supplied is greater than the quantity demanded
Shortage - ANSW-when the quantity demanded is greater than the quantity supplied
Inelastic - ANSW-when the elasticity of demand is less than -1 (greater than one absolute value)
Elastic - ANSW-when the elasticity of demand is between -1 and 0 (between 0 ad 1 in absolute value)
Unit elastic - ANSW-when the elasticity of demand is exactly -1 (exactly 1 in absolute value)
Perfectly Elastic Curve - ANSW-horizontal
Perfectly Inelastic Curve - ANSW-vertical
Elasticity of Demand - ANSW-how responsive the quantity demanded is to a change in price. the more
responsive, the more elastic
Revenue - ANSW-price * quantity
What makes a product more elastic? - ANSW-number of substitutes
necessity vs luxury
time
good classifications
budget share
Substitutes - ANSW-more substitutes = more elastic
Luxury vs. Necessity - ANSW-necessities are more inelastic
luxury goods are more elastic
Time (Elasticity of Demand) - ANSW-short run: less elastic
long run: more elastic
Budget Share (Elasticity of Demand) - ANSW-the more money allocated from your budget to a product,
the more elastic the product is
Elasticity of Supply - ANSW-measures the responsiveness of a quantity supplied to a change in price
Price Controls - ANSW-attempt to set or manipulate prices through government involvement in the
market
Price Ceiling - ANSW-maximum price a good can legally be bought or sold for
ex. rent control
Price Floor - ANSW-minimum price a good can legally be bought or sold for
ex. minimum wage
Binding price ceilings lead to... - ANSW-shortages
Externalities - ANSW-when individuals don't consider the costs or benefits of their actions on others
Positive Externalities - ANSW-Benefits received by people other than the producers or consumers in the
market
Negative Externalities - ANSW-people that aren't the producer or consumer pay (social cost)
Lack of Property Rights - ANSW-externalities occur because property rights have not been clearly defined
Commodity Tax - ANSW-tax on goods like fuel, liquor and cigarettes
Commodity Tax Effect - ANSW-government can tax consumers or producers with the same effect
