Principles of economics - Exam 1 study
questions with correct answers
Economics - CORRECT ANSWER✔✔-The study of how to best allocate
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scarce resources |
Comes from greek words "oikonomos" - the one who manages the
| | | | | | | | | | |
household
Scarcity - CORRECT ANSWER✔✔-Limited nature of society's resources.
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The more scare something is, the more valuable, expensive, and hard it
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is to find
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10 Economic Principles - CORRECT ANSWER✔✔-1. People face trade
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off's
2. The cost of something is what you give up to get it
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3. Rational people think at the margin
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4. People respond to incentives
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5. Trade can make everyone better off
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6. Markets are usually a good way to organize economic activity
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7. Governments can sometimes improve economic outcomes
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,8. A country's standard of living, depends on its ability to produce goods
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and services
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9. Prices rise when the government prints too much money (inflation)
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10. Society faces short run tradeoff's between inflation and
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unemployment
Efficiency - CORRECT ANSWER✔✔-The property of society getting the
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most it can from scarce resources
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Equality - CORRECT ANSWER✔✔-The property of distributing economic
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prosperity uniforming among members of society
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Opportunity cost - CORRECT ANSWER✔✔-What must be given up in
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order to obtain something else
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If you want one opportunity you may need to miss another
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Rational People - CORRECT ANSWER✔✔-People who have
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systematically and purposefully do the best they can to achieve their
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objective
Marginal change - CORRECT ANSWER✔✔-A small incremental
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adjustment to a plan of action | | | | |
, Incentive - CORRECT ANSWER✔✔-Something that induces a person to
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act (ex. rewards cards)
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Market Economy - CORRECT ANSWER✔✔-An economy that allocates
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resources through the centralization of many firms and households.
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An economy based on spending money
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Property Rights - CORRECT ANSWER✔✔-The ability of an individual to
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own and exercise control over scarce resources
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Market Failure - CORRECT ANSWER✔✔-A system in which a market, left
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on its own, fails to allocate resources efficiently
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When the market fails to provide products to the target audience
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Externality - CORRECT ANSWER✔✔-Impact of one person's actuins in
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the well being of a bystander.
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Ex. FEMA impacts Home Depot
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Market Power - CORRECT ANSWER✔✔-The ability of a single economic
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actor or a small group of actors to have substantial influence on market
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influence
questions with correct answers
Economics - CORRECT ANSWER✔✔-The study of how to best allocate
| | | | | | | | | |
scarce resources |
Comes from greek words "oikonomos" - the one who manages the
| | | | | | | | | | |
household
Scarcity - CORRECT ANSWER✔✔-Limited nature of society's resources.
| | | | | | | |
The more scare something is, the more valuable, expensive, and hard it
| | | | | | | | | | | |
is to find
| |
10 Economic Principles - CORRECT ANSWER✔✔-1. People face trade
| | | | | | | | |
off's
2. The cost of something is what you give up to get it
| | | | | | | | | | | |
3. Rational people think at the margin
| | | | | |
4. People respond to incentives
| | | |
5. Trade can make everyone better off
| | | | | |
6. Markets are usually a good way to organize economic activity
| | | | | | | | | |
7. Governments can sometimes improve economic outcomes
| | | | | |
,8. A country's standard of living, depends on its ability to produce goods
| | | | | | | | | | | |
and services
| |
9. Prices rise when the government prints too much money (inflation)
| | | | | | | | | |
10. Society faces short run tradeoff's between inflation and
| | | | | | | | |
unemployment
Efficiency - CORRECT ANSWER✔✔-The property of society getting the
| | | | | | | | |
most it can from scarce resources
| | | | |
Equality - CORRECT ANSWER✔✔-The property of distributing economic
| | | | | | | |
prosperity uniforming among members of society
| | | | |
Opportunity cost - CORRECT ANSWER✔✔-What must be given up in
| | | | | | | | | |
order to obtain something else
| | | |
If you want one opportunity you may need to miss another
| | | | | | | | | |
Rational People - CORRECT ANSWER✔✔-People who have
| | | | | | |
systematically and purposefully do the best they can to achieve their
| | | | | | | | | | |
objective
Marginal change - CORRECT ANSWER✔✔-A small incremental
| | | | | | |
adjustment to a plan of action | | | | |
, Incentive - CORRECT ANSWER✔✔-Something that induces a person to
| | | | | | | | |
act (ex. rewards cards)
| | |
Market Economy - CORRECT ANSWER✔✔-An economy that allocates
| | | | | | | |
resources through the centralization of many firms and households.
| | | | | | | |
An economy based on spending money
| | | | |
Property Rights - CORRECT ANSWER✔✔-The ability of an individual to
| | | | | | | | | |
own and exercise control over scarce resources
| | | | | |
Market Failure - CORRECT ANSWER✔✔-A system in which a market, left
| | | | | | | | | | |
on its own, fails to allocate resources efficiently
| | | | | | |
When the market fails to provide products to the target audience
| | | | | | | | | |
Externality - CORRECT ANSWER✔✔-Impact of one person's actuins in
| | | | | | | | |
the well being of a bystander.
| | | | |
Ex. FEMA impacts Home Depot
| | | |
Market Power - CORRECT ANSWER✔✔-The ability of a single economic
| | | | | | | | | |
actor or a small group of actors to have substantial influence on market
| | | | | | | | | | | | |
influence
