ECON 100 MIDTERM QUESTIONS AND
CORRECT ANSWERS
Smith' alternative view of wealth ✅✅CORRECT ANSW-wealth = production, not the accumulation
of gold or silver etc.
production meant you could divide labor and trade resources and all succeed much more efficiently
Choices and Opportunity Costs ✅✅CORRECT ANSW-Economics is the study of how society or
individuals allocate scarce resources to satisfy their wants.
What to produce?
How to produce?
Who gets production?
the opportunity cost of a good or service is its cost in terms of what you give up - the forgone
opportunity to pursue the best possible alternative activity with the same amount of time or
resources
what else could you have done?
what have you given up?
Assumptions of Homo Economicus ✅✅CORRECT ANSW-- Self-interested
- Rational
- Maximizing
- Insatiable
- Have full-information
model building and goal of prediction, not realism ✅✅CORRECT ANSW-
microeconomics vs. macroeconomics ✅✅CORRECT ANSW-microeconomics: individual choices
and behavior
macroeconomics: large scale economic phenomenon, aggragate
, mercantilism and its view of wealth ✅✅CORRECT ANSW-wealth = gold or money
a belief from the 16th through the 18th centuries
mostly wanted raw materials to turn into manufactured goods and then sell again in order to
accumulate gold or money
fueled colonialism
Adam Smith ✅✅CORRECT ANSW-wrote Wealth of Nations in 1776
commonly considered first modern work of economics
division of labor, the nature of wages, foreign markets
the problem of deductive reasoning and wrong assumptions ✅✅CORRECT ANSW-
According to Taylor, "trade-offs should be taken seriously" because:
A) Choices have the characteristic that they help some people and hurt others
B) Economists like to use anecdotes
C) Economists care more about corporations than individuals
D) Choices usually benefit everyone ✅✅CORRECT ANSW-A
The invisible hand refers to the idea that
A) People are usually altruistic
B) Opportunity costs affect decisions
C) Effects are usually obvious
D) Pursuing my own self-interest may benefit others ✅✅CORRECT ANSW-D
In Chapter 2 of Taylor, he says that Division of labor means
A) Firms can take advantage of economies of scale
B) Workers can focus on what they do best
C) All of the above
CORRECT ANSWERS
Smith' alternative view of wealth ✅✅CORRECT ANSW-wealth = production, not the accumulation
of gold or silver etc.
production meant you could divide labor and trade resources and all succeed much more efficiently
Choices and Opportunity Costs ✅✅CORRECT ANSW-Economics is the study of how society or
individuals allocate scarce resources to satisfy their wants.
What to produce?
How to produce?
Who gets production?
the opportunity cost of a good or service is its cost in terms of what you give up - the forgone
opportunity to pursue the best possible alternative activity with the same amount of time or
resources
what else could you have done?
what have you given up?
Assumptions of Homo Economicus ✅✅CORRECT ANSW-- Self-interested
- Rational
- Maximizing
- Insatiable
- Have full-information
model building and goal of prediction, not realism ✅✅CORRECT ANSW-
microeconomics vs. macroeconomics ✅✅CORRECT ANSW-microeconomics: individual choices
and behavior
macroeconomics: large scale economic phenomenon, aggragate
, mercantilism and its view of wealth ✅✅CORRECT ANSW-wealth = gold or money
a belief from the 16th through the 18th centuries
mostly wanted raw materials to turn into manufactured goods and then sell again in order to
accumulate gold or money
fueled colonialism
Adam Smith ✅✅CORRECT ANSW-wrote Wealth of Nations in 1776
commonly considered first modern work of economics
division of labor, the nature of wages, foreign markets
the problem of deductive reasoning and wrong assumptions ✅✅CORRECT ANSW-
According to Taylor, "trade-offs should be taken seriously" because:
A) Choices have the characteristic that they help some people and hurt others
B) Economists like to use anecdotes
C) Economists care more about corporations than individuals
D) Choices usually benefit everyone ✅✅CORRECT ANSW-A
The invisible hand refers to the idea that
A) People are usually altruistic
B) Opportunity costs affect decisions
C) Effects are usually obvious
D) Pursuing my own self-interest may benefit others ✅✅CORRECT ANSW-D
In Chapter 2 of Taylor, he says that Division of labor means
A) Firms can take advantage of economies of scale
B) Workers can focus on what they do best
C) All of the above
