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ECN 211 ASU Final Exam Marburger Questions & answers
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ECN 211 ASU Final Exam MarburgerThe Circular Flow Diagram - ANS-Green arrows represent the flow of money and red
represents to flow of goods/services
Production possibilities Frontier/ Curve PPF: PPC - ANS-The curve shows what is
possible within an economy
D- impossible
A&B - feasible efficient
C - feasible & inefficient
PPF shifts out when... - ANS-the economy can produce more of everything
Opportunity Cost - ANS-the cost of what you give up to get something else in terms of
time, money, or other goods
Absolute Advantage - ANS-Who can make most of that good
Comparative Advantage - ANS-The lowest opportunity cost for that good
What would allow Panama and Canada to trade? - ANS-They want to trade within their
opportunity cost
Demand - ANS-The amount consumers are willing and able to purchase
Supply - ANS-The amount that producers are willing and able to produce
Law of demand - ANS-Demand always slopes down
Law of supply - ANS-Supply always slopes up
Equilibrium - ANS-Where the two curves meet
Demand shifters - ANS-- Price of substitute or complement
- Consumer preference
- population growth
- Income and expectation of future income
, Supply shifters - ANS-- Price of input
- Technological advancement
- Number of producers
- Producer expectation
Solve for Equilibrium Price and Quantity - ANS-Make both sides equal to each other
Ex. Q = 100 - 6P & Q = 28 + 3P
100 - 6P = 28 + 3P
72 - 9P
P=8
28 + 3(8)
28 + 24
52 = Q
Economic Growth is measured... - ANS-Growth is measured in many ways, usually
GDP (the market value of all final goods and services produced in a nation's borders)
Productivity (output/labor hours)
What causes productivity? - ANS-- Human Capital
- Natural Resources
- Physical Capital
- Technological Knowledge
Human Capital - ANS-Knowledge and skills of workers (education, training)
Natural Resources - ANS-Anything that comes from nature (timber, oil, coal)
Physical Capital - ANS-All the physical tools and machines used to do business
Technological Knowledge - ANS-The general knowledge of the world
GDP Equation - ANS-GDP = G + C + I + NX = ALL PRODUCTION = ALL
CONSUMPTION
Consumption (C) - ANS-Things purchased for final use
Investment (I) - ANS-Things purchased to use to make more money later
Government Spending (G) - ANS-Any money the government uses
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