ECON B-251 EXAM 1 Questions And Answers Latest Top Score.

ECON B-251 EXAM 1 Questions And Answers Latest Top Score. economics - correct answer. the study of satisfying unlimited wants by utilizing limited resources scarcity - correct answer. unlimited wants and limited resources the economic problem - correct answer. deals with the problem of scarcity Microeconomics - correct answer. studies decisions by individual firms and governments Macroeconomics - correct answer. studies decisions made or actions taken by the entire economy ex. inflation, unemployment, GDP rationality assumption - correct answer. assumes that people do not intentionally make decisions that would leave them worse off. bounded rationality - correct answer. assumes peoples rationality is constrained because they do not have full information prospect theory - correct answer. demonstrates how people react differently to potential loss and potential gain. maximizer - correct answer. try to make optimal decisions based on the rationality assumption satisficer - correct answer. try to find a "good enough" solution based on bounded rationality self-interest - correct answer. pursuit of one's own goals. Maximize happiness. social-interest - correct answer. choices that are best for society as a whole tradeoff - correct answer. when we choose one thing, we give up something else non-strategic - correct answer. decisions based on an individual's or firm's own costs and benefits strategic - correct answer. decisions based on others' decisions as well as one's cost and benefits opportunity cost - correct answer. The highest-valued, next-best alternative that must be sacrificed to obtain something or to satisfy a want marginal analysis - correct answer. evaluates the consequences of making incremental changes in the use of their resources positive economics - correct answer. purely descriptive statements or scientific predictions- a statement of what is. normative economics - correct answer. analysis involving value judgements-- what ought to be models - correct answer. Simplified representations of the real world used as the basis for predictions or explanations three scarcity questions - correct answer. 1. what to produce? 2. how to produce? 3. for whom? Four factors of production - correct answer. land, labor, capital, entrepreneurship Two types of capital - correct answer. human (knowledge) and physical (machines) marginal cost - correct answer. the opportunity cost of producing one more unit of a good marginal benefit - correct answer. the additional benefit to a consumer from consuming one more unit of a good or service decreasing marginal benefit - correct answer. the maximum amount of money a consumer is willing to pay for an additional good or service is decreasing. production efficiency - correct answer. we cannot produce additional amounts of a good without decreasing the production amount of another product allocative efficiency - correct answer. every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing inefficiency - correct answer. any point inside the PPC comparative advantage - correct answer. the ability to produce a good at a lower opportunity cost than another producer absolute advantage - correct answer. producing a greater quantity of a good, or service than competitors, using the same amount of resources. Specialization - correct answer. put all production into one good or service economic growth - correct answer. what does a shifting out of the PPC represent? consumer goods - correct answer. goods produced for personal satisfaction capital goods - correct answer. goods used to produce other goods per-worker production function - correct answer. used to illustrate long run economic growth using the factors of production along with other variables, such as technology. law of diminishing returns - correct answer. A decrease in a firm's marginal output from adding an additional unit of input. market - correct answer. arrangements (or location) that individuals have for exchanging with one another. markets & prices - correct answer. an economic system that allocates resources based on relative prices determined by supply and demand demand - correct answer. quantities of specific goods or services that individuals or groups will purchase at various possible prices, other things being constant The Law of Demand - correct answer. quantity demanded is inversely related to price. If the price of x increases, the quantity demanded decreases. substitution effect - correct answer. When the relative price (opportunity cost) of a good or service rises, people seek substitutes for it, so the quantity demanded of the good or service decreases. income effect - correct answer. When the price of a good or service rises relative to income, people cannot afford all the things they previously bought, so the quantity demanded of the good or service decreases.