ECON 2105 (UGA) Final Exam Review(with solved solutions)
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Course
Econ
Institution
Econ
allocative efficiency correct answers A state of the economy in which production is in accordance with consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it
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ECON 2105 (UGA) Final Exam Review(with solved
solutions)
allocative efficiency correct answers A state of the economy in which production is in accordance with
consumer preferences; in particular, every good or service is produced up to the point where the last unit
provides a marginal benefit to society equal to the marginal cost of producing it
productive efficiency correct answers a situation in which a good or service is produced at the lowest
possible cost
equity correct answers the fair distribution of economic benefits
factors of production correct answers labor, capital, natural resources, and other INPUTS used to make
goods and services
scarcity correct answers A situation in which unlimited wants exceed the limited resources available to
fulfill those wants
normal good correct answers a good for which the demand increases as income rises and decreases as
income falls
complements correct answers goods and services that are used together
inferior good correct answers a good for which the demand increases as income falls and decreases as
income rises
economics correct answers the study of the choices people make to attain their goals, given their scarce
resources
Where does optimal decision making occur? correct answers at the MARGIN (where marginal benefit
equals marginal cost)
market correct answers a group of buyers and sellers of a good or service and the institution or
arrangement by which they come together to trade
, rational decision making occurs when correct answers people have used all available information and
have weighed all known benefits and costs
centrally planned economy correct answers an economy in which the government decides how economic
resources will be allocated
market economy correct answers an economy in which the decisions of households and firms interacting
in markets allocate economic resources
mixed economy correct answers An economy in which most economic decisions result from the
interaction of buyers and sellers in markets but in which the government plays a significant role in the
allocation of resources.
opportunity cost correct answers The highest-valued alternative that must be given up in order to engage
in an activity.
three economic questions that every society must answer correct answers 1.) What goods and services
will be produced?
2.) How will the goods and services be produced?
3.) Who will receive the goods and services produced?
Who could possibly make decisions about what goods and services will be produced? correct answers
consumers, firms and government
In the US, what determines who will receive goods and services? correct answers income distribution
hypothesis correct answers a statement, usually about casual relationships, that may either be correct or
incorrect and has to be tested before it can be accepted (or not rejected)
positive analysis correct answers analysis concerned with what is
normative analysis correct answers analysis concerned with what ought to be
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