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Principles Of Economics Final Exam With Questions And Correct Answers Latest Version
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Principles Of Economics Final Exam With Questions And Correct Answers Latest Version
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Principles Of Economics Final Exam WithQuestions And Correct Answers Latest
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Chapter 1- This chapter is pretty basic and just introduces a lot of the principles that come up over and
over again-- wouldn't really learn much about it Answer:
Economics Answer: how to best allocate scarce resources (have fewer than ultimately want)
Trade Offs Answer: Always give up something to get something else (when spend more on
something else or devote more time to something less on another thing)
Efficiency vs. equality trade off Answer: --efficiency means getting most from scare resources
--equality means more uniform distribution
--Always conflict between the two -
Opportunity cost Answer: --WHAT YOU GIVE UP TO GET SOMETHING ELSE (always want it in terms
of something else)
-- or in other words how something would have been used (what could have gotten out of it whether it's
time or money) if you were not doing this
--- example-- the opportunity cost of going to college is the tuition payment in addition to the time could
have spend working
Marginal Costs and Benefits Answer: * in order to act, the marginal benefits always have to be
greater than the marginal costs--- THE MARGINAL COSTS AND MARGINAL BENEFIT NOT TOTAL
* in types of MC could ask you disregard what you have already spent and look at the marginal (how
much would be added and then the benefit and then compare)
2024
,Opportunity cost calculations Answer: * what you are giving up/ what you are getting (makes sense
bc always want in terms of the thing you are giving up-- the other unit-- ALWAYS IN TERMS OF THE
OTHER THING)
Chap 2--- this chapter is also not super important; mostly shows the scientific method of economists and
how use that same process Answer:
Production Possibilities Curve (what is it, the layout, what does slope represent, feasibility of points, and
why PPFs are bowed out) Answer: * graphical representation of two goods and combos of quantity
of output that can be produced given inputs
* layout== two endpoints that show production of all on one good and then one good per axis
* slope= opportunity cost of one good in terms of another (so like y/x would give opp cost of good x)
* feasibility= points outside are not possible, inside are not not efficient; points MOST EFFICIENT ON
CURVE
* why bowed out= law of increasing app costs (as produce more of one good app cost of good B goes
up)
Shifts to PPF (two ways) Answer: 1. if have more technology ( say you have computers and cars--
just the number of computers will go up so one endpoint will be the same and other will move up but
whole thing will move up)
2. Also due to more/ better FOP (land, labor, capital)
3. Better economy
Micro vs. Macro Answer: Micro= how households and firms make decisions on smaller scale
Macro= how all markets operate together combined w gov
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,Chapter 3-- Gains from Trade-- this is an impt chapter-- comp adv, specialization, op cost w comp adv.
Answer:
Gains from trade Answer: * trade makes everyone better off
* even can produce two goods independently (using just two here to simplify), trade allows you to
specialize and be more efficient
Absolute Advantage Answer: * what most ppl think of when think about who has an advantage for
trade
* if can produce more in same time period or produce same amount in less
* someone can have an abs. adv. in both goods, but never a comparative advantage in both and we use
comp adv. for deciding who should trade with whom
Comparative Advantage ( relationship to opp cost in definition; can someone not have one at all or have
one in both?) Answer: * relationship to opportunity cost-- whoever has the LOWEST opportunity
cost for a given product has the comparative advantage in that good and should specialize in it and then
get the other good mostly from another person who specializes in that
* NOT POSSIBLE TO HAVE A COMP ADVATNAGE IN BOTH GOODS BC THE IDEA OF THE OPP COST OF ONE
BEING THE RECIP OF THE OTHER
What is opportunity cost in terms of Answer: * always in terms of the other good (so that good is on
top)
Ways can frame to calculate comp adv (2 ways) Answer: * First way-- easier-- will give you one
standard time frame so then you will just use the numbers of goods
* Second way-- harder-- instead of giving to you the items in terms of one time frame will give in terms
of one output and the different amounts of time take to produce--- WHAT YOU HAVE TO DO IS PUT ALL
IN TERMS OF ONE TIME FRAME (SO MAYBE AN HOUR OR ONE WORKING DAY ETC AND THEN
CALCULATE COMP ADV. USING THESE NUMBERS-- SHOWS THAT ALWAYS NEED IN TERMS OF THE
GOODS (IF HAVE IN TERMS OF TIME NEED TO CONVERT OTHERWISE WILL GET ALL THE ANSWERS
FLIPPED!!!!!!)
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, Price of Trade Answer: * must be between two opportunity costs of one given product (so say op
cost of met is 2 and 4 pot the price would need to be between 2 and 4)
Comp. Adv on International Scale w Intl. Trade Answer: * should export the goods you have comp.
adv. in and opposite should import
Chapter 4-- Markets and Competition-- this is also an impt chapter bc introduces the idea of supply and
demand model that use throughout rest of the book so understanding that+ factors that shift one curve
or both curves) Answer:
Demand+ Supply Answer: * Demand=behavior of buyers
*Supply= behavior of sellers
Law of Demand (onto demand first) (in relation to prices) Answer: * As the price goes up, the
quantity demanded down and as the price goes down, quantity demanded goes up!!!!-- makes sense if
think about how much people buy based on prices
Demand Curve (what it is, slope, and what's on axes), how do you get market demand Answer: *
graphic representation between the quantity of goods demanded and the price of the goods
* downward sloping
* Price is on y axis and quantity is on x axis
* How to get market demand-- add the indv. demand curves horizontally at a given price
Shifts in Demand vs. Movements along demand curve Answer: * Movements along curve just occur
due to sole changes in prices
* Shifts in demand often not directly related to the price of that specific good
2024
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