Studyguide for Chapter 1 _ 2 - Study Guide for Chapter 1...

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Study Guide for Chapter 1 and 2 Important knowledge point Chapter 1 1. Define economics and describe the link between scarcity and the need to make choices. 2. Understand the categories that economists use for classifying resources (labor, capital…). Chapter 2 1. Understand the concept of opportunity cost, and how to measure it in terms of explicit costs and implicit costs. Understand the difference between explicit and implicit cost (money price for certain good is not equal to its real cost). 2. Understand the relationship between social opportunity cost and Production Possibilities Frontier. Use PPF to explain the concepts of productive inefficiency, recession, the Law of increasing opportunity cost, and economic growth. 3. Understand the sources of the gains from specialization. 4. Understand the difference between comparative advantage and absolute advantage, and how do these two advantages relate to specialization. 5. Understand the major problems that an economic system tries to answer. What are the two features of an economic system? 6. What are the four major economic systems in the history? What are the resource allocation methods and resource ownership methods in those economic systems? Sample Questions for Chapter 1 and 2 1.Economics is the study of choice under conditions of a. demand b. supply c. scarcity d. opportunity e. abundance 2. Due to a scarcity of resources, a. every society must undertake central planning b. the government must decide how to allocate available resources c. some members of each society must live in poverty d. every society must choose among competing uses of available resources e. resource availability exceeds the possible uses for available resources 3. In examining consumer behavior, one of the constraints faced by consumers is a. utility b. quantities consumed
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c. tastes and preferences d. entrepreneurial ability e. income 4. Society's resources include a. land and labor b. labor and machinery c. land, labor, and capital d. land, capital, and money e. labor, capital, and money 5. A physician's knowledge and skills is referred to by economists as a. human capital b. labor c. physical capital d. entrepreneurship e. intellectual raw materials
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This test prep was uploaded on 04/07/2008 for the course ECON 202 taught by Professor Guokai during the Spring '07 term at University of Mississippi School of Law.

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Studyguide for Chapter 1 _ 2 - Study Guide for Chapter 1...

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