ECON 201 Midterm Exam: Questions & Answers: Updated Complete Solution

What is the Law of Increasing Opportunity Cost? (Ans- states that cost arises when producing more because resources are heterogenous and not equally useful in production of each product Demand (Ans- how much consumers willing and able to buy at each price, in given market and time period, considering all other factors are constant (ceteris paribus) Law of Demand (Ans- inverse relation between price and quantity demanded of good, ceteris paribus What is the "ceteris paribus" assumption? (Ans- Holds constant all factors, other than product price, that might influence demand What are non-price factors? (Ans- Tastes/preferences, income prices of closely-related goods, expectationsAccording to the Law of Demand, what happens to the quantity demanded if price of a good falls, ceteris paribus? (Ans- The quantity demanded of that good rises According to the Law of Demand, what happens to the quantity demanded if price of a good rises, ceteris paribus? (Ans- The quantity demanded of that good falls Economics (Ans- the study of allocation of scarce resources to satisfy competing ends Scarce economic resources (Ans- land, labor, capital,