ECO 201 Final Exam Study Guide

ECO 201 Final Exam Study Guide - Econ 201- Final Exam Study...

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Unformatted text preview: Econ 201- Final Exam Study Guide Chapter 1 Scarcity- the wants of people cannot be fully satisfied Resources- things used to produce goods and services • People and labor ( L ) • Kapital ( K )- anything used to produce a good or service that has already been produced • Land ( L )- anything given by nature (dirt, coal, rivers, etc) • Human Kapital- skills are “produced” and put to use • Land Kapital- improved land, already processed and made better Economic Society- must decide what to produce , for who, and how ? Institutions- ways society can be organized • Traditional- what your family produced; persists over time Central planning- produce g & s to satisfy wants (need info, incentives---use prices to convey this information) Opportunity cost- whatever must be given up to obtain some item (6, 25) Marginal changes- small incremental changes adjustments to a plan of action (6) Market economy- an economy that allocates resources through the decentralized decisions of many firms and households they interact in markets for goods and services (9). Market power- the ability of a single economic actor (or small group) to have substantial influence on market prices (11). • A monopoly or firm that does not face much competition Productivity- the quantity of goods and services produced from each hour of a workers time (12). Inflation- an increase in the overall level of prices in the economy (12). Business cycle- fluctuations in economic activity such as employment and production (13). Chapter 2 Circular Flow diagram- a visual model of how money flows through firms and households (22). Production Possibilities frontier- graph that shows the combinations of output that the economy can possibly produce given available factors of production and production technology (24). Chapter 3 Absolute advantage- the ability to produce a good using fewer inputs than the other producer (52). Comparative advantage- the ability to produce a good at a lower opportunity cost that the other producer. Chapter 4 Market- a group of buyers and sellers of a particular good or service (64). Competitive market- a market where there are many buyers and sellers so that each had a negligible impact on the market price (64). Quantity demand- the amount of a good that buyers are willing and able to purchase (65) Law of demand- the claim that the quantity demanded of a good falls when the price of a good rises (65). Demand schedule- a table showing the relationship between the price of a good and the quantity demanded (65). Demand curve- a graph of the relationship between the price of a good and the quantity demanded (66) Normal good- a good for which an increase in income leads to an increase in demand (a car)(68)....
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This document was uploaded on 11/02/2011 for the course ECO 201 at Miami University.

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ECO 201 Final Exam Study Guide - Econ 201- Final Exam Study...

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