ECON 110 CHAPTERS 1-4 UPDATED ACTUAL QUESTIONS
AND CORRECT ANSWERS
Question:
1. Scarcity
Answer:
a situation in which unlimited wants exceed the limited resources available to fulfill those wants
Question:
2. Economics
Answer:
the study of the choices consumers, business managers, and government officials make to attain their
goals, given their scarce resources.
Question:
3. Economic Models
Answer:
simplified versions of reality used to analyze real-world economic situations
Question:
4. Market
Answer:
a group of buyers and sellers of a good or service and the institutions or arrangements by which they come
together to trade
Question:
5. Marginal Analysis
Answer:
analysis that involves comparing marginal benefits and marginal costs
Question:
6. Trade-Offs
Answer:
because of scarcity producing more of one good or service means producing less of another good or
service
Question:
7. Opportunity Cost
Answer:
the highest valued alternative that must be given up to engage in an activity
Question:
8. Centrally Planned Economy
Answer:
economy in which the government decides how economic resources will be allocated
, Question:
9. Market Economy
Answer:
economy in which the decisions of households and firms interacting in markets allocate economic
resources
Question:
10. Mixed Economy
Answer:
economy in which most economic decisions result from the interaction of buyers and sellers in markets;
however, the government plays a significant role in the allocation of resources
Question:
11. Productive Efficiency
Answer:
a situation in which a good or service is produced at the lowest possible cost
Question:
12. Allocative Efficiency
Answer:
a situation in which production is in accordance with consumer preferences
Question:
13. Voluntary Exchange
Answer:
both the buyer and the seller of a product are made better off by the transaction
Question:
14. Equity
Answer:
the fair distribution of economic benefits
Question:
15. Economic Variable
Answer:
something measurable that can have different values
Question:
16. Positive Analysis
Answer:
analysis that is concerned with "what is"
Question:
17. Normative Analysis
Answer:
analysis that is concerned with "what ought to be"
AND CORRECT ANSWERS
Question:
1. Scarcity
Answer:
a situation in which unlimited wants exceed the limited resources available to fulfill those wants
Question:
2. Economics
Answer:
the study of the choices consumers, business managers, and government officials make to attain their
goals, given their scarce resources.
Question:
3. Economic Models
Answer:
simplified versions of reality used to analyze real-world economic situations
Question:
4. Market
Answer:
a group of buyers and sellers of a good or service and the institutions or arrangements by which they come
together to trade
Question:
5. Marginal Analysis
Answer:
analysis that involves comparing marginal benefits and marginal costs
Question:
6. Trade-Offs
Answer:
because of scarcity producing more of one good or service means producing less of another good or
service
Question:
7. Opportunity Cost
Answer:
the highest valued alternative that must be given up to engage in an activity
Question:
8. Centrally Planned Economy
Answer:
economy in which the government decides how economic resources will be allocated
, Question:
9. Market Economy
Answer:
economy in which the decisions of households and firms interacting in markets allocate economic
resources
Question:
10. Mixed Economy
Answer:
economy in which most economic decisions result from the interaction of buyers and sellers in markets;
however, the government plays a significant role in the allocation of resources
Question:
11. Productive Efficiency
Answer:
a situation in which a good or service is produced at the lowest possible cost
Question:
12. Allocative Efficiency
Answer:
a situation in which production is in accordance with consumer preferences
Question:
13. Voluntary Exchange
Answer:
both the buyer and the seller of a product are made better off by the transaction
Question:
14. Equity
Answer:
the fair distribution of economic benefits
Question:
15. Economic Variable
Answer:
something measurable that can have different values
Question:
16. Positive Analysis
Answer:
analysis that is concerned with "what is"
Question:
17. Normative Analysis
Answer:
analysis that is concerned with "what ought to be"
