Honors Economics

Chapter 1 Review Questions

1. Define Scarcity. (1pt.)
2. Identify and describe the three factors of productions. (3pts.)
3. Describe the role entrepreneurs play in the economy. (1pt.)
4. Explain why the opportunity cost of a decision must always be something desirable. (1pt.)
5. Explain the economic phrase Guns or Butter. (1pt.)
6. Explain how a production possibilities curve can illustrate the efficiency of an economy. (1pt.)
7. Explain how the production possibilities curve illustrates opportunity cost. (1pt.)
Chapter 2 Review Questions
1. Describe an economic system. (1pt.)
2. Define safety net. (1pt.)
3. Discuss the roles of households and firms in a market economy. (1pt.)
4. Explain how competition among firms benefits consumers. (1pt.)
5. Define Laissez-faire. (1pt.)
6. Explain what Adam Smith meant by the invisible hand of the marketplace. (1pt.)
Chapter 3 Review Questions
1. Describe some of the opportunity costs of having a greater government role in the economy. (1pt)
2. Explain at least three benefits of the free enterprise system. (3pts)
3. Explain how the decisions you make as a consumer influence the economy. (1pt.)
4. Describe how economic stability is measured. (1pt.)
5. Explain how scientific discoveries and technological innovations create the need for rules and regulations to
protect individuals and businesses.
6. Explain how the criminal justice system is a public good. (1pt.)
7. Explain the difference between the public sector and the private sector. (1pt.)
8. Explain the difference between cash transfers and in-kind-benefits. (1pt.)
9. Describe how Social Security is an example of income redistribution. (1pt.)
Chapter 4 Review Questions
1. Explain the law of demand. (1pt.)
2. Define income effect. (1pt.)
3. Identify and describe the three characteristics of a demand curve. (6pts.)
4. Define inferior good and give one example. (2pts.)
5. Identify one good that can be considered a complement for another. (1pt.)
6. Identify two goods that can be considered substitutes. (2pts.)
7. Explain how the ceteris paribus assumption affects the demand curve. (1pt.)
8. Explain the elasticity of demand. (1pt.)
9. Explain why demand for home heating fuel is inelastic in cold weather. (1pt.)
Chapter 5 Review Questions
1. Explain the law of supply (1pt.)
2. Explain the difference between supply and quantity supplied. (1pt.)
3. Describe how the marginal product of labor changes as more workers are hired. (1pt.)
4. Explain the impact of diminishing marginal returns on labor. (1pt.)
5. Describe how a firm calculates marginal cost. (1pt.)
6. Explain how a subsidy affects supply. (1pt.)
7. Describe the purpose of an excise tax. (1pt.)
Explain how government regulation can affect a producers output decisions. (1pt.)