Econ 1001 Exam 1 | Study Questions
and correct detailed Answers | 2026
Updates | 100% correct
Economics - ANSWER- -the study of how people use their scarce resources to satisfy their
unlimited wants
Resources - ANSWER- -the inputs, or factors of production, used to produce the goods and
services that people want
consist of labor, natural resources, and entrepreneurial ability
Labor - ANSWER- -the physical and mental effort used to produce goods and services
Capital - ANSWER- -the buildings, equipment, and human skills used to produce goods and
services
Infrastructure
Natural Resources - ANSWER- -all gifts of nature used to produce goods and services
includes renewable and exhaustible resources
Entrepreneurial Ability - ANSWER- -the imagination required to develop a new product or
process, the skill needed to organize production, and the willingness to take the risk of profit or
loss
Entrepreneur - ANSWER- -a profit-seeking decision maker who starts with an idea, organizes
an enterprise to bring that idea to life, and assumes the risk of the operation
,Wages - ANSWER- -payment to resource owners for their labor
Interest - ANSWER- -payment to resource owners for the use of their capital
Rent - ANSWER- -reward for entrepreneurial ability
sales - resource cost
Good - ANSWER- -a tangible (physical properties) product to satisfy human wants
Service - ANSWER- -an activity, or intangible product, used to satisfy human wants
examples: accounting, haircut, garbage, maintenance, teaching, banking, cedar point, kings
island, concerts
Scarcity - ANSWER- -occurs when the amount people desire exceeds the amount available at
a zero price
Market - ANSWER- -a set of arrangements by which buyers and sellers carry out exchange at
mutually agreeable terms
Product Market - ANSWER- -a market in which a good or service is bought and sold
(customers)
Resource Market - ANSWER- -a market in which a resource is bought and sold (business)
Circular-Flow Model - ANSWER- -a diagram that traces the flow of resources, products,
income, and revenue among economic decision makers
, Rational Self Interest - ANSWER- -each individual tries to maximize the expected benefit
achieved with a given cost or to minimize the expected cost of achieving a given benefit
Marginal - ANSWER- -incremental, additional, or extra
used to describe a change in an economic variable
***PLUS ONE, additional***
Microeconomics - ANSWER- -the study of economic behavior in particular markets, such as
that for computers or unskilled labor
Macroeconomics - ANSWER- -the study of the economic behavior of entire economies, as
measured, for example, by total production employment (Gross Domestic Profit; GDP)
Economic Fluctuations - ANSWER- -the rise and fall of economic activity relative to the long-
term growth trend of the economy
AKA Business Cycles
Economic Theory (Model) - ANSWER- -a simplification of reality used to make predictions
about cause and effect in the real world
The Scientific Method - ANSWER- -...begin with a question...
Variable - ANSWER- -a measure, such as price or quantity, that can take on different values at
different times
and correct detailed Answers | 2026
Updates | 100% correct
Economics - ANSWER- -the study of how people use their scarce resources to satisfy their
unlimited wants
Resources - ANSWER- -the inputs, or factors of production, used to produce the goods and
services that people want
consist of labor, natural resources, and entrepreneurial ability
Labor - ANSWER- -the physical and mental effort used to produce goods and services
Capital - ANSWER- -the buildings, equipment, and human skills used to produce goods and
services
Infrastructure
Natural Resources - ANSWER- -all gifts of nature used to produce goods and services
includes renewable and exhaustible resources
Entrepreneurial Ability - ANSWER- -the imagination required to develop a new product or
process, the skill needed to organize production, and the willingness to take the risk of profit or
loss
Entrepreneur - ANSWER- -a profit-seeking decision maker who starts with an idea, organizes
an enterprise to bring that idea to life, and assumes the risk of the operation
,Wages - ANSWER- -payment to resource owners for their labor
Interest - ANSWER- -payment to resource owners for the use of their capital
Rent - ANSWER- -reward for entrepreneurial ability
sales - resource cost
Good - ANSWER- -a tangible (physical properties) product to satisfy human wants
Service - ANSWER- -an activity, or intangible product, used to satisfy human wants
examples: accounting, haircut, garbage, maintenance, teaching, banking, cedar point, kings
island, concerts
Scarcity - ANSWER- -occurs when the amount people desire exceeds the amount available at
a zero price
Market - ANSWER- -a set of arrangements by which buyers and sellers carry out exchange at
mutually agreeable terms
Product Market - ANSWER- -a market in which a good or service is bought and sold
(customers)
Resource Market - ANSWER- -a market in which a resource is bought and sold (business)
Circular-Flow Model - ANSWER- -a diagram that traces the flow of resources, products,
income, and revenue among economic decision makers
, Rational Self Interest - ANSWER- -each individual tries to maximize the expected benefit
achieved with a given cost or to minimize the expected cost of achieving a given benefit
Marginal - ANSWER- -incremental, additional, or extra
used to describe a change in an economic variable
***PLUS ONE, additional***
Microeconomics - ANSWER- -the study of economic behavior in particular markets, such as
that for computers or unskilled labor
Macroeconomics - ANSWER- -the study of the economic behavior of entire economies, as
measured, for example, by total production employment (Gross Domestic Profit; GDP)
Economic Fluctuations - ANSWER- -the rise and fall of economic activity relative to the long-
term growth trend of the economy
AKA Business Cycles
Economic Theory (Model) - ANSWER- -a simplification of reality used to make predictions
about cause and effect in the real world
The Scientific Method - ANSWER- -...begin with a question...
Variable - ANSWER- -a measure, such as price or quantity, that can take on different values at
different times
