EC 111 Exam 1 UA questions with
complete solutions
Economics assumes that people... - correct answer ✔✔are rational, self-interested, and respond
to incentives
Economics is the study of - correct answer ✔✔how individuals, firms, and society make
decisions to allocate limited resources during competing wants
Microeconomics is the study of - correct answer ✔✔decision making by individuals, businesses,
and industries
Macroeconomics is the study of - correct answer ✔✔broader issues in the economy such as
inflation, unemployment, and national output
Who makes macroeconomic policies - correct answer ✔✔government entities such as the
federal reserve, congress, and the president
Lawyers are discussing how to keep unemployment from rising in the coming year. Is this a
micro issue or a macro issue? - correct answer ✔✔macro
Executives at GM are discussing whether raising prices will generate more profit. Is this a micro
issue or a macro issue? - correct answer ✔✔micro
What are economic models? - correct answer ✔✔simplified versions of reality used to analyze
real-world economic situations
, What does 'ceteris paribus' imply? - correct answer ✔✔all other relevant factors are held
constant
Efficiency - correct answer ✔✔how well resources are used and allocated
Equity - correct answer ✔✔the fairness of various issues and policies
positive analysis - correct answer ✔✔questions based on the understanding of information or
facts
normative analysis - correct answer ✔✔questions based on opinions or societal beliefs, ie. what
should(n't) take place
scarcity - correct answer ✔✔economics focuses on the allocation of resources to satisfy
unlimited wants with finite resources
opportunity cost - correct answer ✔✔the value of whatever you gave up to make a decision
the benefits of specialization - correct answer ✔✔individuals tend to work in careers most
suited to them
benefits of competition - correct answer ✔✔private markets force businesses to be efficient
who is adam smith? - correct answer ✔✔He was the author of "The Wealth of Nations" and is
known as the father of modern economics.
what is marginal cost? - correct answer ✔✔the cost of producing one more unit of a good
complete solutions
Economics assumes that people... - correct answer ✔✔are rational, self-interested, and respond
to incentives
Economics is the study of - correct answer ✔✔how individuals, firms, and society make
decisions to allocate limited resources during competing wants
Microeconomics is the study of - correct answer ✔✔decision making by individuals, businesses,
and industries
Macroeconomics is the study of - correct answer ✔✔broader issues in the economy such as
inflation, unemployment, and national output
Who makes macroeconomic policies - correct answer ✔✔government entities such as the
federal reserve, congress, and the president
Lawyers are discussing how to keep unemployment from rising in the coming year. Is this a
micro issue or a macro issue? - correct answer ✔✔macro
Executives at GM are discussing whether raising prices will generate more profit. Is this a micro
issue or a macro issue? - correct answer ✔✔micro
What are economic models? - correct answer ✔✔simplified versions of reality used to analyze
real-world economic situations
, What does 'ceteris paribus' imply? - correct answer ✔✔all other relevant factors are held
constant
Efficiency - correct answer ✔✔how well resources are used and allocated
Equity - correct answer ✔✔the fairness of various issues and policies
positive analysis - correct answer ✔✔questions based on the understanding of information or
facts
normative analysis - correct answer ✔✔questions based on opinions or societal beliefs, ie. what
should(n't) take place
scarcity - correct answer ✔✔economics focuses on the allocation of resources to satisfy
unlimited wants with finite resources
opportunity cost - correct answer ✔✔the value of whatever you gave up to make a decision
the benefits of specialization - correct answer ✔✔individuals tend to work in careers most
suited to them
benefits of competition - correct answer ✔✔private markets force businesses to be efficient
who is adam smith? - correct answer ✔✔He was the author of "The Wealth of Nations" and is
known as the father of modern economics.
what is marginal cost? - correct answer ✔✔the cost of producing one more unit of a good
