Macroeconomics Exam 1 Review UCF Latest Update
What is economics? - ANSWER the study of how we make decisions in a
world where resources are limited
What is scarcity? - ANSWER Limited quantities of resources to meet
unlimited wants
What resources are scarce in the world? - ANSWER Land, water
What are resources? - ANSWER the basic categories of inputs used to
produce goods and services
What are some examples of resources? - ANSWER land, labor, capital
(money & factories), entrepreneurship
What is opportunity cost? - ANSWER the loss of potential gain from other
alternatives when one alternative is chosen.
What are explicit costs? - ANSWER Costs that requires money use and
spending. ($)
What are implicit costs? - ANSWER Costs that do not require money
spending. (Time, Opportunity Cost)
What is an example of an explicit cost? - ANSWER A person pays for a cup
of coffee
What is an example of an implicit cost? - ANSWER You stand in line for 30
min to get on a ride at Disney World
, What is marginal analysis? - ANSWER analysis that involves comparing
marginal benefits and marginal costs
What is marginal benefit? - ANSWER what you gain by adding one more
unit
What is marginal cost? - ANSWER the additional cost of producing on
additional unit of output
What is an incentive? - ANSWER a positive or negative environmental
stimulus that motivates behavior
What is a positive statement? - ANSWER claims that attempt to describe
the world as it is
What is a normative statement? - ANSWER claims that attempt to
prescribe how the world should be
What is an example of a positive statement? - ANSWER Minimum-wage
laws cause unemployment
What is an example of a normative statement? - ANSWER The
government should raise the minimum wage
What is an economic model? - ANSWER It is a simplified version of some
aspect of economic life used to analyze an economic issue.
What is the purpose of the circular flow diagram? - ANSWER It explains
how people in the economy interact with each other
In the circular flow diagram, who are the decision makers? - ANSWER
households and firms
Identify the three factors of production - ANSWER land, labor, capital
In the circular flow diagram, who owns the factors of production? -
ANSWER households
The circular flow diagram illustrates that, in markets for the factors of
production, - ANSWER households are sellers and firms are buyers
What is economics? - ANSWER the study of how we make decisions in a
world where resources are limited
What is scarcity? - ANSWER Limited quantities of resources to meet
unlimited wants
What resources are scarce in the world? - ANSWER Land, water
What are resources? - ANSWER the basic categories of inputs used to
produce goods and services
What are some examples of resources? - ANSWER land, labor, capital
(money & factories), entrepreneurship
What is opportunity cost? - ANSWER the loss of potential gain from other
alternatives when one alternative is chosen.
What are explicit costs? - ANSWER Costs that requires money use and
spending. ($)
What are implicit costs? - ANSWER Costs that do not require money
spending. (Time, Opportunity Cost)
What is an example of an explicit cost? - ANSWER A person pays for a cup
of coffee
What is an example of an implicit cost? - ANSWER You stand in line for 30
min to get on a ride at Disney World
, What is marginal analysis? - ANSWER analysis that involves comparing
marginal benefits and marginal costs
What is marginal benefit? - ANSWER what you gain by adding one more
unit
What is marginal cost? - ANSWER the additional cost of producing on
additional unit of output
What is an incentive? - ANSWER a positive or negative environmental
stimulus that motivates behavior
What is a positive statement? - ANSWER claims that attempt to describe
the world as it is
What is a normative statement? - ANSWER claims that attempt to
prescribe how the world should be
What is an example of a positive statement? - ANSWER Minimum-wage
laws cause unemployment
What is an example of a normative statement? - ANSWER The
government should raise the minimum wage
What is an economic model? - ANSWER It is a simplified version of some
aspect of economic life used to analyze an economic issue.
What is the purpose of the circular flow diagram? - ANSWER It explains
how people in the economy interact with each other
In the circular flow diagram, who are the decision makers? - ANSWER
households and firms
Identify the three factors of production - ANSWER land, labor, capital
In the circular flow diagram, who owns the factors of production? -
ANSWER households
The circular flow diagram illustrates that, in markets for the factors of
production, - ANSWER households are sellers and firms are buyers
