Personal Finance Final Exam Review Backup Copy

Front

Limited resources and unlimited wants leads to the fundamental economic problem of

Back

Scarcity

Answer explanation

Economics is the study of scarcity. Because we have unlimited wants and limited resources, we must make opportunity cost decisions.

Front

Which points on the graph represent the efficient use of resources? Options: B and C, E and F, G, A, B, C and D

Back

A, B, C and D

Answer explanation

Anywhere on the graph represents the efficient use of resources. Output is only possible at this point if all resources are being used.

Front

What does point G represent? Options: efficient use of resources, underutilization of resources, an output of goods that is impossible to produce today, an opportunity cost decision

Back

underutilization of resources

Front

What is the opportunity cost of moving from point C to point D?

Back

hats

Answer explanation

You have to give up hats in order to make more gloves.

Front

In the US economy, who provides public goods to households and businesses?

Back

The Government

Front

Which economic goal aims to reduce waste? Options: Economic Security, Economic Equity, Economic Efficiency, Economic Growth

Back

Economic Efficiency

Answer explanation

In economics, the term efficiency means using resources without waste.

Front

Which factor of production: The work done by Bill Gates

Back

Entrepreneurship

Answer explanation

An entrepreneur is someone who combines the other factors of production (land, labor, capital) in a new way.

They don't have to be Bill Gates. Most entrepreneurs own small businesses.

Front

In a market capitalist (free market) economy like the United States, what is encouraged?

Back

Competition is encouraged, leading to lower prices and a greater variety of goods.

Answer explanation

The U.S. has a Market Capitalist economic system. We have a lot of economic freedom, low prices, convenience, and a great variety of goods.

What we DON'T have is robust public services (like universal healthcare or free childcare).

Front

Which graph shows a decrease in equilibrium price and an increase in equilibrium quantity? Options: A, B, C, D

Back

B

Front

Which graph shows the market for computers when computer manufacturing technology improves?

Back

B

Answer explanation

The development of new technology will cause an increase in supply (the supply curve will shift to the right).

This will cause equilibrium quantity to increase and equilibrium price will decrease.