ECO111 Test 1, Chapter 1 – 5
questions n answers rated A+ passed
Economics - correct answer ✔✔The study of how society manages scarce resources.
Opportunity Cost - correct answer ✔✔what you give up to get an item.
Marginal Change - correct answer ✔✔used to describe a small incremental adjustment to an
existing plan of action.
Invisible Hand - correct answer ✔✔The ability for free markets to reach desirable outcomes,
despite the self-interest of market participants.
market failures - correct answer ✔✔a situation which the market on its own will fail to produce
an efficient allocation of resources.
externality - correct answer ✔✔a type of market failure, happens when one person's action
inadvertently affects another person's well-being.
Principle 9 - correct answer ✔✔Prices rise when the government prints too much money.
economic model - correct answer ✔✔a simplified representation of some aspect of the
economy.
circular flow diagram - correct answer ✔✔a diagram that simplifies the economy by including
only two types of decision makers; firms and households.
, factors of production - correct answer ✔✔goods and services that firms produce; labor, land,
and capital.
feasible, but not efficient - correct answer ✔✔a point inside the possibilities frontier is
production possibilities frontier - correct answer ✔✔a graph that shows the various
combinations of output that the economy can possibly produce given the available factors of
production and production technology.
feasible - correct answer ✔✔easily done
efficient - correct answer ✔✔if the economy is getting all it can from the scarce resources it has
available.
Microeconomics - correct answer ✔✔the study of how households and firms make decisions
and how they interact in specific markets.
Macroeconomics - correct answer ✔✔the study of economy-wide phenomena.
positive statements - correct answer ✔✔they make a claim about how the world is; they are
descriptive. What WILL happen.
normative statements - correct answer ✔✔they are perspective; they make a claim about how
the world ought to be. What SHOULD happen.
absolute advantage - correct answer ✔✔ability to produce a good using fewer inputs than
another producer
questions n answers rated A+ passed
Economics - correct answer ✔✔The study of how society manages scarce resources.
Opportunity Cost - correct answer ✔✔what you give up to get an item.
Marginal Change - correct answer ✔✔used to describe a small incremental adjustment to an
existing plan of action.
Invisible Hand - correct answer ✔✔The ability for free markets to reach desirable outcomes,
despite the self-interest of market participants.
market failures - correct answer ✔✔a situation which the market on its own will fail to produce
an efficient allocation of resources.
externality - correct answer ✔✔a type of market failure, happens when one person's action
inadvertently affects another person's well-being.
Principle 9 - correct answer ✔✔Prices rise when the government prints too much money.
economic model - correct answer ✔✔a simplified representation of some aspect of the
economy.
circular flow diagram - correct answer ✔✔a diagram that simplifies the economy by including
only two types of decision makers; firms and households.
, factors of production - correct answer ✔✔goods and services that firms produce; labor, land,
and capital.
feasible, but not efficient - correct answer ✔✔a point inside the possibilities frontier is
production possibilities frontier - correct answer ✔✔a graph that shows the various
combinations of output that the economy can possibly produce given the available factors of
production and production technology.
feasible - correct answer ✔✔easily done
efficient - correct answer ✔✔if the economy is getting all it can from the scarce resources it has
available.
Microeconomics - correct answer ✔✔the study of how households and firms make decisions
and how they interact in specific markets.
Macroeconomics - correct answer ✔✔the study of economy-wide phenomena.
positive statements - correct answer ✔✔they make a claim about how the world is; they are
descriptive. What WILL happen.
normative statements - correct answer ✔✔they are perspective; they make a claim about how
the world ought to be. What SHOULD happen.
absolute advantage - correct answer ✔✔ability to produce a good using fewer inputs than
another producer
