ECN 211 UPDATED ACTUAL QUESTIONS
AND CORRECT ANSWERS
COMPREHENSIVE STUDY GUIDE
●● Economies:
Answer: The science of how individuals and societies deal with scarcity.
The wants of people are greater than the resources available to satisfy
these wants. People have to make decisions that require trade-offs.
●● Incentives:
Answer: Rewards for engaging in a particular activity
●● Resources
Answer: Things that are used to produce other things to satisfy people's
wants
●● Wants
Answer: What people would buy if their incomes were unlimited
●● Microeconomies
Answer: The part of economic analysis that studies individual decision
making
that is undertaken by individuals (or households) and firms
,●● Macrorcnomics
Answer: The part of economic analysis that studies the behavior of the
economy
as a whole; it deals with economy-wide phenomena, such as changes in
unemployment, the
general price level, and national income.
●● Aggregates
Answer: The sum of the total, such as total output in an economy
●● Economic Systems
Answer: The institutional mechanism through which resources are
utilized to
satisfy human wants
●● Command and Control
Answer: A system with a centralized authority that decides what items to
produce and how many of each, determines how the scarce resources
will be organized in
the items' production, and identifies who will be able to obtain the items.
●● Price System
, Answer: Also called a market system, a price system is an economic
system which
answers the three basic questions of what, how, and for whom to
produce via decentralized
decision making.
●● Rationality Assumption
Answer: The assumption that individuals will not intentionally make
decisions that would leave them worse off
●● Models
Answer: Simplified representations of the real world; developed and
used as aids in
understanding, explaining, and predicting economic phenomena in the
real world
●● Ceteris Paribus Assumption
Answer: The assumption that nothing changes except the factors that
are studied. It is used to isolate the effect of a change in one variable on
another one by
assuming that all other variables do not change.
●● Bounded Rationality
AND CORRECT ANSWERS
COMPREHENSIVE STUDY GUIDE
●● Economies:
Answer: The science of how individuals and societies deal with scarcity.
The wants of people are greater than the resources available to satisfy
these wants. People have to make decisions that require trade-offs.
●● Incentives:
Answer: Rewards for engaging in a particular activity
●● Resources
Answer: Things that are used to produce other things to satisfy people's
wants
●● Wants
Answer: What people would buy if their incomes were unlimited
●● Microeconomies
Answer: The part of economic analysis that studies individual decision
making
that is undertaken by individuals (or households) and firms
,●● Macrorcnomics
Answer: The part of economic analysis that studies the behavior of the
economy
as a whole; it deals with economy-wide phenomena, such as changes in
unemployment, the
general price level, and national income.
●● Aggregates
Answer: The sum of the total, such as total output in an economy
●● Economic Systems
Answer: The institutional mechanism through which resources are
utilized to
satisfy human wants
●● Command and Control
Answer: A system with a centralized authority that decides what items to
produce and how many of each, determines how the scarce resources
will be organized in
the items' production, and identifies who will be able to obtain the items.
●● Price System
, Answer: Also called a market system, a price system is an economic
system which
answers the three basic questions of what, how, and for whom to
produce via decentralized
decision making.
●● Rationality Assumption
Answer: The assumption that individuals will not intentionally make
decisions that would leave them worse off
●● Models
Answer: Simplified representations of the real world; developed and
used as aids in
understanding, explaining, and predicting economic phenomena in the
real world
●● Ceteris Paribus Assumption
Answer: The assumption that nothing changes except the factors that
are studied. It is used to isolate the effect of a change in one variable on
another one by
assuming that all other variables do not change.
●● Bounded Rationality
