NDSU Econ 201 Exam 1 Questions and
Answers Graded A+
Economics - answer The study of how a society uses goods and services in the face
of economic scarcity
Absolute Scarcity - answer When a country runs out of usable resources
Economic Scarcity - answer The concept that people have infinate wants and
desires
Commodities - answer Satisfies people's wants a desires (goods and services)
Goods - answer Physical Items (car, house)
Services - answer Intangible items (education, loans)
categories of Resources - answer 1.) Labor
2.) Land
3.) Capital
4.) Entrepreneurship
Labor - answer All human effort that goes into production of goods and services
Land - answer All natural resources used for production
Capital - answer The tools used in the production of goods
Entrepreneurship - answer An innovator or inventor who takes a risk financially
Earnings - answer A person's compensation for working
Types of Earnings - answer Land-Rent
Labor-Wages
Capital-Intrest
Entrepreneurship-Profits
Normal Profit - answer Needs to be earned in order for the business to stay in
business
Excess Profit - answer Profits that exceed the business' basic needs
economic agents - answer 1.) Households
, 2.) Firms (business')
3.) Government
Households - answer Supply's Labor to business' and government while purchasing
goods and services
Firms (business) - answer Purchaces resources (labor, capital) and sells goods and
services
Government - answer play's supporting role in process and collects taxes from firms
and households
Market - answer A place where the voluntary exchange of goods and services
between a seller and buyer can occur
Fields of Study in Economics - answer 1.) Microeconomics
2.) Macroeconomics
Microeconomics - answer The study of the efficient allocation of relatively scarce
resources and the distribution of income.
Macroeconomics - answer The study of the determination of the whole economy
such as employment, price level, and total output
Economic issues or Goals - answer 1.) Efficiency
2.) Equity
3.) Stability
4.) Economic Growth
Efficiency - answer making the best possible use of resources when achiving a goal
Equity - answer Refers to the way society's output of goods is distributed - is it fair?
Stability - answer 1.) Price - measured by the consumer price index
2.) Jobs - measured by the unemployment rate
Economic Growth - answer Refers to the substantial and sustained increase in the
nation's income or output
Technical Efficiency - answer efficent use of resoucreces when producing a good or
service
Allocative Efficiency - answer the efficient distrabution of society's scarce resources
Consumer Price Index (CPI) - answer Measures the change in price of market base
of consumer goods and services purchased by households.
Answers Graded A+
Economics - answer The study of how a society uses goods and services in the face
of economic scarcity
Absolute Scarcity - answer When a country runs out of usable resources
Economic Scarcity - answer The concept that people have infinate wants and
desires
Commodities - answer Satisfies people's wants a desires (goods and services)
Goods - answer Physical Items (car, house)
Services - answer Intangible items (education, loans)
categories of Resources - answer 1.) Labor
2.) Land
3.) Capital
4.) Entrepreneurship
Labor - answer All human effort that goes into production of goods and services
Land - answer All natural resources used for production
Capital - answer The tools used in the production of goods
Entrepreneurship - answer An innovator or inventor who takes a risk financially
Earnings - answer A person's compensation for working
Types of Earnings - answer Land-Rent
Labor-Wages
Capital-Intrest
Entrepreneurship-Profits
Normal Profit - answer Needs to be earned in order for the business to stay in
business
Excess Profit - answer Profits that exceed the business' basic needs
economic agents - answer 1.) Households
, 2.) Firms (business')
3.) Government
Households - answer Supply's Labor to business' and government while purchasing
goods and services
Firms (business) - answer Purchaces resources (labor, capital) and sells goods and
services
Government - answer play's supporting role in process and collects taxes from firms
and households
Market - answer A place where the voluntary exchange of goods and services
between a seller and buyer can occur
Fields of Study in Economics - answer 1.) Microeconomics
2.) Macroeconomics
Microeconomics - answer The study of the efficient allocation of relatively scarce
resources and the distribution of income.
Macroeconomics - answer The study of the determination of the whole economy
such as employment, price level, and total output
Economic issues or Goals - answer 1.) Efficiency
2.) Equity
3.) Stability
4.) Economic Growth
Efficiency - answer making the best possible use of resources when achiving a goal
Equity - answer Refers to the way society's output of goods is distributed - is it fair?
Stability - answer 1.) Price - measured by the consumer price index
2.) Jobs - measured by the unemployment rate
Economic Growth - answer Refers to the substantial and sustained increase in the
nation's income or output
Technical Efficiency - answer efficent use of resoucreces when producing a good or
service
Allocative Efficiency - answer the efficient distrabution of society's scarce resources
Consumer Price Index (CPI) - answer Measures the change in price of market base
of consumer goods and services purchased by households.
