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Economics
Final test review
| Question | Answer |
|---|---|
| Economics | The study of how individuals, families, businesses, and societies use limited resources to fulfill their unlimited wants. |
| Scarcity | Condition of not being able to have all of the goods and services one wants, because wants exceed what can be made from all available resources at any given time. |
| Opportunity Cost | The value of the next best alternative that had to be given up to do the action that was chosen. |
| Entrepreneurship | The ability of individuals to start new businesses, to introduce new products and processes, and to improve management techniques. |
| Production Possibilities Curve | Used by economists to show the maximum combinations of good and services that can be produced from a fixed amount of resources in a given period of time. Businesses use this the most. |
| What is the difference between a “need” and a “want”? | everything other than basic survival needs is considered a want |
| Name and describe the three factors of production. | Land: refers to natural resources present without human intervention Labor: The work we do is considered labor, so we can consider this a human resource. Capitol: The manufactured goods used to make other goods and services. |
| Name and describe each of the economic systems. | Traditional system: Decisions are made on their customs and belief from one generation to the next. Command System: The “pure” command system is similar to the traditional system, because the individual has very little if any influence in the economy. |
| Name and describe each of the economic systems. | Market System: Individuals own the factors of production and make economic decisions through free interaction while looking out for their own and families’ best interests.Mixed Economy: Combines the characteristics of more than one type of economy |
| Private property exists under which system? | Capitalism |
| What are the three basic questions concerning each of the economic systems? | What should be produced? What will be produced and how much of each? For whom should it be produced? |
| Which of the economic systems answer all three basic questions? | All of them |
| According to Adam Smith, what is the role of the Government in the economy? | Little or no involvement |
| Adam Smith’s, “invisible hand” refers to the role of what? | The market |
| Unrestricted competition is a major characteristic of what economic system? | Pure market |
| Define Disposable Income | income remaining for a person to spend or save after all taxes have been paid |
| Define Warranty | the promise made by a manufacturer or seller to repair or replace a product if it is found to be faulty within a certain period of time. |
| What are the two scarce resources involved once a decision is made to make a purchase? | Income and time |
| Why would consumers prefer generic products over a brand-name? | cheaper price |
| What are the five consumer rights? | Right to safety, right to be informed, the right to choose, right to be heard, right to redress |
| How are interest rates decided for all types of credit? | State and federal governments |
| What is a finance charge? | Cost of credit expressed in dollars and cents. Takes into account interest costs plus any other charges connected with credit. |
| A financial institution that is owned and operated by members to provide savings accounts and low interest loans is called what? | Credit Union |
| What tactics do credit companies use to get people to sign up with them? | Low interest rates |
| Define Usury law. | Law restricting the amount of interest that can be charged for credit |
| What is collateral? | Size of your capital or personal wealth |
| What consists of a mortgage and how is a mortgage paid off? | They can include fees for such items as the title search, legal costs, loan application, credit report, house inspections, and taxes. |
| What is liability insurance? | Lowest cost of insurance on a vehicle. It will pay for the others damage and injury, but not yours. |
| In a Roth IRA, what is tax free? | interest |
| Name an example of a stock index. | Dow Jones, S&P 500 |
| Describe the Federal Deposit Insurance Corporation (FDIC). | Insures certain banks up to an amount. |
| What do Keogh and IRA plans allow people to do? | Save money each year for retirement Establish their own pension plan Defer taxation of the interest they earn on their accounts. |
| The increase in value of an asset from the time it is bought to the time it is sold, is called what? | Capital gains |
| Explain the Money Market Funds? | Normally uses investors’ money to buy the short-term debt of businesses and banks One writes a check to gain access to the account. |
| What are treasury bonds? | Several types of larger investments (bonds/notes) sold by the federal Treasury Department. |
| What is the level of risk for both bonds and stocks? | Bonds are low risk and stocks are high risk |
| In the law of demand, if the price of an item goes up, what happens with the quantity? | Goes down. |
| In the law of supply, higher prices prompt producers to do what? | Produce more product |
| What would cause a shift in either supply or demand, not in the quantity? | Increase in technology, income |
| When the price of a good is too high for consumers, what do they do? | Buy less |
| What is Diminishing Marginal Utility? | The more you have of something, the less satisfaction you will get from an additional unit. |
| Generally, the more substitutes there are for a good, the more elastic or inelastic the demand? | elastic |
| If the price of a product is above its equilibrium price, the result is what? | surplus |
| Entrepreneurs: | a person who organizes, manages, and assumes the risks of a business in order to gain profits. |
| Unlimited Liability: | requirement that an owner is personally and fully responsible for all losses and debts of a business |
| Joint Venture: | a partnership set up for a specific purpose just for a short period of time |
| When purchasing a franchise, what does the franchiser do to help? | The chain, will have a training program to teach the franchisee about the business and set the standards of business operations |
| What business type accounts for the greatest share of revenues in the United States? | Corporations |
| Name the characteristics of a Monopoly. | A single Seller No Substitutes No Entry Almost Complete Control of Market Price |
| Give a couple of examples of what a Natural Monopoly would be. | The government granted exclusive rights to natural monopolies: Providers of things like: utilities, bus service, and cable TV |
| Which one of our market systems tend to have more stable prices? | Oligopoly |
| What two market systems have a characteristic of Non-price competition? | Oligopoly and Monopolistic Competition |
| Federal agencies actually decreased competition in an industry by doing what? | Creating legal barriers to entry in an industry |
Created by:
Deja Warren
Popular Economics sets