Economics Final Exam Review
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Last updated 2:10 PM on 12/16/22
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39 Terms
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Law of Demand
inverse relationship (price up, demand down or price down, demand up)
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Law of Supply
direct relationship (price up, demand up or price down, demand down)
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Equilibrium Price
price at which buyer and seller are both happy
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Law of Diminishing Marginal Utility
for each use of a product, the level of satisfaction/usefulness decreases
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Shortage
product priced below equilibrium price
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Surplus
product priced above equilibrium price
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Profit
Revenue-Expenses (what gets people out of bed in the morning)
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Scarcity
lack of a product = value
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Opportunity Cost
what is sacrificed with a decision
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Stock
a share in a company
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Bond
an “I-owe-you” from the government
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Mutual Fund
a group of stocks in one investment, which reduces risk
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ROI
return on investment
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Capital
fancy word for money
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Free Enterprise
no government intervention
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Normal Goods
demand goes up in a good economy (Oreos/the real deal)
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Inferior Goods
demand goes up in a bad economy (Creme-Betweens/off-brand products)
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The Federal Reserve
central bank that controls interest rates
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Interest Rate
the amount of money a person pays for the privilege of borrowing money
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Economics
the study of CHOICES with limited resources
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Microeconomics
the study of INDIVIDUAL choices
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Macroeconomics
the study of larger economics (nations)
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Entrepreneur
risk-taker who seeks profit
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GDP
Gross Domestic Product…total economic output of a nation
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Recession
two consecutive quarters of negative economic growth
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Human Capital
workers/workforce
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401K
retirement plan that taxes on the back end
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Roth IRA
retirement plan that taxes on the front end
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“Live beneath your means”
Dave Ramsey advice on how to become wealthy
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Mortgage
home loan
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An increase in the price of a product will reduce the amount purchased because…
C. consumers will substitute other products for the one whose price has risen
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Which of the following will not cause the demand for product K to change?
C. a change in the price of K (price does not shift demand, but it changes the quantity demanded)
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Which of the following would not shift the demand curve for beef?
B. a reduction in the price of cattle feed (price change does not shift demand curve itself, but it moves along the demand curve)
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If the price of K declines, the demand curve for the complementary project J will…
C. shift to the right
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A firm’s supply curve is upsloping because
B. mass production economies are associated with larger levels of output
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Refer to the above diagram. The equilibrium price and quantity in this market will be…
A. $1.00 and 200
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Refer to the above diagram. A price of $20 in this market will result in:
E. a shortage of 100 units
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Which of the above diagrams illustrates the effect of a decrease in incomes upon the market for secondhand clothing?
B. A only
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9. Which of the above diagrams illustrates the effect of a governmental subsidy on the market for AIDS research
C. C only
Note 
Flashcards (23)