Economics Final Exam Review

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Definition: value of the next best alternative.

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Opportunity Cost

Front

Mary is weighing her options for spending her time after school. She decides to attend basketball practice. In making this choice, she chose not to spend that time doing homework, spending quality time with her friends, and studying for her Econ final; these forgone options are her

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opportunity cost.

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Scarcity forces people to make

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trade offs.

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Studying incentives helps economists

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understand how people make decisions and use their scarce resources.

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Which type of economy is known for using the barter system? Options: Command Economy, Market Economy, Mixed Economy, Traditional Economy

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Traditional Economy

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Which type of economy relies entirely on the “invisible hand” to guide the decisions of buyers and sellers to the benefit of the entire economy?

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Market Economy

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Which type of economy allows the government to control all the means of production?

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Command Economy

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Which type of economy best describes the United States? Options: Command Economy, Market Economy, Mixed Economy, Traditional Economy

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Mixed Economy

Front

When Luis goes to the public dog park, he notices that there is excrement everywhere. This phenomenon is best explained by

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the Tragedy of the Commons.

Front

Kiley went to school to become a nurse. She attained her degree and clinical experience. Kiley has invested in which factor of production?

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Human Capital