Economics Semester Exam Study Guide(Study guide for Economics Semester Exam)With Correct Answers.What is the fundamental problem that economics tries to solve? - Answer Scarcity In what market do individuals earn income? - Answer Factor markets What are the characteristics of a free enterprise system? - Answer Consumers and businesses make the FOR WHOM, WHAT and HOW decisions What is the chief disadvantage of a sole proprietorship? - Answer Unlimited liability What is a multinational corporation? - Answer Corporation that has manufacturing or service operations in a number of different countries What is Microeconomics? - Answer Deals with behavior and decision making by small units such as individuals and firms.What is Macroeconomics? - Answer Deals with the economy as a whole and decision making by large units such as government or unions.What does the demand curve illustrate? - Answer The quantity demanded at each and every possible price that might prevail in the market at a given time.What is inelastic? - Answer Percentage change in the independent variable causes a less than proportionate change in the dependent variable What is elastic? - Answer Percentage change in the independent variable causes a more than proportionate change in the dependent variable What is unit elastic demand? - Answer Change in the independent variable causes a proportional change of the dependent variable In a market economy a low price signals what to producers? - Answer Low prices are bad for the producers because they are seeking a profit In a market economy a low price signals what to consumers? - Answer Low prices are good for the consumers, who are seeking good deals to save money.When does a surplus occur? - Answer When quantity supplied is greater than quantity demanded.What does laissez-faire mean? - Answer Government should not interfere with business activity.What is perfect competition? - Answer Large number of well informed independent buyers and sellers who exchange identical products 1 / 2
Economics Semester Exam Study Guide(Study guide for Economics Semester Exam)With Correct Answers.What is monopolistic competition? - Answer Market structure having all conditions of pure competition except for identical products What is a monopoly? - Answer A single producer (able to charger whatever price they choose) What is an oligopoly? - Answer A few large sellers dominate and have the ability to affect prices in the industry.What happens when labor and management decides to go into arbitration? - Answer They agree to place a dispute before a 3rd party. Whatever decision is decided has already been accepted by the 2 parties (binding settlement) What does the traditional theory of wages state? - Answer Supply and demand for a workers skills and services determine the wage or salary.What is the single most important source of revenue for national government? - Answer Taxes What is proportional tax? - Answer Tax percentage is the same regardless of the level of income What is a progressive tax? - Answer Tax percentage increases as the level of income increases .What is a regressive tax? - Answer Tax percentage decreases as the level of income decreases.What is demand? - Answer Combination of desire, ability, and willingness to buy a product.What is supply? - Answer Schedule of quantities offered for sale at all possible prices in the market.What is marginal cost? - Answer Extra cost of producing one additional unit of production.What is factors of production? - Answer Productive resources that make up the four categories of land, capital, labor, and entrepreneurship.What is equilibrium price? - Answer Price where quantity supplied equals quantity demanded.What is union shop? - Answer Workers must join a union after being hired.
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