ECON 203 EXAM 1 questions with correct answers

Principles of Economics: People face trade-offs CORRECT ANSWER Have to make choices because of scarcity Scarcity CORRECT ANSWER A situation in which unlimited wants exceed the limited resources available to fulfill those wants Principles of Economics: The cost of something is what you give up to get it. CORRECT ANSWER Opportunity Costs Principles of Economics: Rational people think at the margin CORRECT ANSWER Weighs marginal costs and marginal benefits. (See Transactional Utility) Transactional Utility CORRECT ANSWER quality of the deal that you receive, evaluated in reference to "what the item should cost" Principles of Economics: People respond to... CORRECT ANSWER INCENTIVE Principles of Economics: Trade makes everyone better off CORRECT ANSWER Society as a whole, may not be the best for everyone. Principles of Economics: Markets are usually a good way to organize economic activity CORRECT ANSWER Invisible hand steers resources to optimal use. Principles of Economics: What can improve market outcomes s