1. Midterm Review
Honors

2. The added benefit received from the purchase or use of the next unit of a product
Marginal utility

3. What does a production possibilities frontier demonstrate?
Total production combination of any two products
The opportunity cost of increasing production of one in terms of the loss of the other

4. The arrangement of labor so that each worker is doing fewer tasks than before:
Division of labor

5. What does specialization lead to?
Increased productivity

6. Where is labor bought and sold?
Factor market

7. What is the key benefit of the free enterprise system characteristic of private property rights?
Private property can be used as collateral for entrepreneurs to qualify for bank loans to start new businesses

8. What type of business structure has unlimited life?
Corporation

9. The private ownership of the factors of production:
Capitalism

10. If the price of a product increased, what would happen to the demand of those things considered its compliment?
Shift left

11. What is the likely elasticity of demand for cocaine?
Inelastic

12. Of what business type is double taxation is a disadvantage?
Corporation

13. Under what conditions of demand would a monopoly be the most free to raise prices?
Inelastic demand

14. What 4 benefits do entrepreneurs provide?
Jobs, tax receipts, products, philanthropy

15. Which economic system, has the lowest standard of living?
Traditional

16. Which economic system fails most to provide for the poor and sick?
Market

17. Why would a person be unwilling to pay the same price for a second shirt, similar, but of a different color than the first?
The second shirt provides diminished marginal utility

18. A college education is an example of:
Investing in one’s human capital
Specialization

19. If a company that uses heavy machinery has to order more machinery to increase production, the elasticity of supply will likely be:
Inelastic

20. The efficient use of the means of production (also referred to as the rate of production:
Productivity

21. An assembly line is an example of:
The division of labor

22. Explains the Law of Demand in that as the price increases for a product, many consumers will purchase similar cheaper items instead
Substitution effect

23. When a politician proclaims support for free universal health care for all, you should scream:
TINSTAAFL!

24. What market type is most likely to engage in acts of collusion?
Oligopoly

25. In free market systems, individuals are largely free to buy and sell what they want. That compromise between buyer and seller wherein both benefit from the transaction is called:
Voluntary exchange

26. What free market characteristic acts as the economic engine of the economy, creating a powerful incentive that creates new entrepreneurs seeking opportunity and success?
Profit motive

27. Why are prices relatively low in a monopolistically competitive market?
Lots of competition with little chances to collude

28. Why do market economic systems provide consumers with the most satisfaction?
They provide a large variety of goods and services
Competition

29. What concept does the common retail slogan, “The customer is always right” reflect?
Consumer sovereignty

30. What government role is being played when Congress passes a bill meant to reinforce federal Lemon Laws?
Setting legal framework

31. What role is the govt. playing when it is enforcing anti-trust laws?
Maintaining competition

32. Taxing the wealthy at a higher rate is an example of the govt
Taxing the wealthy at a higher rate is an example of the govt. engaged in:
Redistributing wealth

33. What business form accounts for over 70% of all US businesses?
Sole proprietorship

34. Define the market wherein a differentiated product with many sellers is sold amid heavy non-price advertising:
Monopolistic competition

35. Which business form had the disadvantage of unlimited liability and finds it most difficult to attract top personnel?
Proprietorship

36. What is the theoretical model economists use to measure the competitive nature of real markets?
Perfect competition

37. One partner in a partnership who’s protected from unlimited liability because she helped finance the venture, but does not take part in managing the firm is called:
A limited partner

38. What market structure defines the women’s shoe market?
Monopolistic competition

39. What type of monopoly is the newly created liquid memory market, a new advancement in computer technology patented by Econolabco?
Technological monopoly

40. What happens to the market price of cars when the recession begins to recover?
Increases

41. A firm is able to take advantage of economies-of-scale and lower its prices below what competitors can afford, forcing them out of the market. Name the monopoly type:
Natural monopoly

42. A lawn mower, a tractor, a factory, a computer, and a drill press are all examples of:
Physical capital
Capital goods

43. Who sets price ceilings?
The government

44. What business form has the most control over price?
Monopoly

45. What will the supply and demand curve look like for a product whose quantities cannot be increased?

46. Why do oligopolies remain oligopolies?
Huge cost barriers

47. Why is it easier for corporations to raise financial capital?
Likelier to get a bank loan
Can issue more shares of stock to the market
Can sell corporate bonds

48. What is the most regulated business type?
Corporation

49. When the price of a product increases, the demand for its substitute:
Shifts right D1 D2

50. What business form is hit with double taxation?
Corporation

51. What happens to the market at equilibrium?
The market is cleared
Surpluses and shortages disappear

52. What happens when price is set above equilibrium?
Surpluses are created

53. Create a demand curve for avocados showing the change in demand from 1935 to 2009:P1 Q1 Q2

54. What would a S&D curve look like that indicated a minimum wage?P S D Q

55. S&D curve for computers when consumer income falls:Q2 Q1

56. Create a S&D curve for desks when wood becomes more expensive and a new strand of malaria wipes out 15% of the world population: S2 S1 D2 D1

57. What happens to market price and quantity for computers when a strike delays production?
Demand doesn’t change
Supply shifts left D