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FSU Eco 2013 Final Exam (1)
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FSU Eco 2013 Final Exam (1)
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FSU Eco 2013 Final ExamWhat is economics? - ANS-the study of how we make choices under scarcity
What is scarcity? - ANS-the concept that there is less of a good freely avalible from nature than
peple would like
(time,money,textbooks)
scarcity necessitates rationing, what is rationing? - ANS-allocating scares goods to those who
want them. Price is used to ration goods
Types of resources - ANS-Human, Physical (man-made, machines), Natural (gold)
capital - ANS-human-made resources used to produce other goods and services
Resources are scarce - ANS-trade-off must be made (opportunity costs)
Opportunity cost is - ANS-the highest valued alturnative that must be sacrificed when choosing
an option
Individuals are rational: - ANS-they try to get the most from their limited resources "greatest
benifit @ least possible cost"
Ex. Chick-fil-a vs. 5 guys burger
Insentives matter - ANS-Choice is influenced in a predictable way by changing the incentives
Individuals make decisions at the margin. What does marginal mean? - ANS-the effect of a
change in the current situation
ex. taco bell, taco deal
cost-benifit analyst - ANS-one will undergo an action when the marginal benefit outweighs the
marginal costs
ex. additional airport security vs. lead clean-up
Information helps us make better choices but is costly - ANS-ex. New house vs. new notebook
Beware of secondary effects - ANS-economic actions generate both direct and indirect effects
ex. fuel efficiency regulation, trade restrictions
What are secondary effects? - ANS-the indirect impact of an event or policy that may not be
easily and immediatly obserbable
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