ECN 221 UNCW Final Exam 2025

Examples of market failure - -monopoly, externality Micro-economics - -study of individual choices Macro-economic - -larger view of economy; production of al goods and services Neoclassical - -accepted form of how to view economy and where to place focus "mainstream" Constrained optimization - -limited amount of resourced, maximizes consumption of goods and services; doing best we can with what we have Individual choice - -work vs. Leisure; how much to spend /save now vs. Later; how much/what to consume Allocative efficiency - -when the mix of goods being produced represents the allocation that society most desires (producing what people want which is determined by society) Supply curve "very short run" - -willing to accept any price for product; vertical Examples: Fresh fruit-you accept whatever price because it will eventually go bad Land-fixed quantity Price ceiling - -prevents price from rising to equilibrium; creates shortage Example: apartment rent in nyc Price floor - -prevents price from falling to equilibrium; set above equilibrium price; creates surplus Example: minimum wage Example of command market for kidneys - -unos: organ sharing; list of people who need kidney and when someone dies or donates they match on list (non-government organization) Repugnance - -(roth's idea) constraint on market activity; limits what can happen in markets; strong dislike of certain activities/transactions in economy Slippery slope - -leads to undesirable activities(illegal/legal) ECN221 ECN221 Example of slippery slope - -if you buy/sell kidneys= what about hearts? Maybe for the right price Absolute advantage - -when one nation can produce a product at a lower cost relative to another nation Comparative advantage - -the goods in which a nation has its greatest productivity advantage or its smallest productivity disadvantage ; also the goods that a nation can produce at a lower cost when measured in terms of opportunity cost Protectionism - -government policies to reduce or block imports Demand curve - -a line that shows the relationship between price and quantity demanded of a certain good service on a graph with quantity on the horizontal axis and price on the vertical axis Shows maximum price consumers are willing and able to pay for each quantity, not necessarily what the do pay Supply curve - -a line that shows the relationship between price and quantity supplied on a graph, with quantity supplied on the horizontal axis and price on the vertical axis Minimum price accepted Comparative advantage _____ opportunity cost - -lowers Economy - -the social arrangements that determine what is produced, how it is produced and for whom it is produced Market-oriented economy - -an economy in which most economic decisions are made by buyers and sellers who may be individuals or firms Command economy - -an economy in which that government either makes or strongly influences most economic decisions Black market - -an illegal market that breaks government rules on prices or sales Division of labor - -dividing the work required to produced a good or service into tasks performed by different workers Specialization - -when workers or firms focus on particular tasks in the overall production process for which they are well suited Economies of scale - -when the average cost of producing each individual unit declines as total output increases ECN221 ECN221 Globalization - -the trend in which buying and selling in markets have increasingly crossed national borders Exports - -goods and services that are produced domestically and sold in another country Imports - -goods and services produced abroad and sold domestically Microeconomics - -the branch of economics that focuses of actions of particular actors within the economy like households workers and business firms Macroeconomics - -the branch of economics that focuses on the economy as a while including issues like growth, unemployment and the balance of tr