ECON 1001-003 Midterm #1 | Latest
study set | Questions and verified
Answers
economics - ANSW-the study of how people use their scarce resources to satisfy their unlimited wants
resources - ANSW-the inputs, or factors of production, used to produce the goods and services that
people want; resources consist of labor, capital, natural resources, and entrepreneurial ability
labor - ANSW-the physical and mental effort used to produce goods and services
capital - ANSW-the buildings, equipment, and human skills used to produce goods and services
natural resources - ANSW-all gifts of nature used to produce goods and services; includes renewable and
exhaustible resources
entrepreneurial ability - ANSW-the imagination required to develop a new product or process, the skill
needed to organize production, and the willingness to take the risk of profit or loss
entrepreneur - ANSW-a profit-seeking decision maker who starts with an idea, organizes an enterprise to
bring that idea to life, and assumes the risk of the operation
wages - ANSW-payment to resource owners for their labor
interest - ANSW-payment to resource owners for the use of their capital
rent - ANSW-payment to resource owners for the use of their natural resources
profit - ANSW-reward for entrepreneurial ability; sales minus resource cost
good - ANSW-a tangible product used to satisfy human wants
service - ANSW-an activity, or intangible product, used to satisfy human wants
scarcity - ANSW-occurs when the amount people desire exceeds the amount available at a zero price
market - ANSW-a set of arrangements by which buyers and sellers carry out exchange at mutually
agreeable terms
product market - ANSW-a market in which a good or service is bought and sold
resource market - ANSW-a market in which a resource is bought and sold
circular-flow model - ANSW-a diagram that traces the flow of resources, products, income, and revenue
among economic decision makers
rational self-interest - ANSW-each individual tries to maximize the expected benefit achieved with a
given cost or to minimize the expected cost of achieving a given benefit
marginal - ANSW-incremental, additional, or extra; used to describe a change in an economic variable
microeconomics - ANSW-the study of the economic behavior in particular markets, such as that for
computers or unskilled labor
macroeconomics - ANSW-the study of the economic behavior of entire economies, as measured, for
example, by total production and employment (GDP)
economic fluctuations* - ANSW-the rise and fall of economic activity relative to the long-term growth
trend of the economy; also called business cycles
economic theory (model) - ANSW-a simplification of reality used to make predictions about cause and
effect in the real world
, the scientific method - ANSW-...begin with a question...
variable - ANSW-a measure, such as price or quantity, that can take on different values at different times
other-things-constant assumption - ANSW-the assumption, when focusing on the relation among key
economic variable, that other variables remain unchanged, in Latin, "ceteris paribus"
behavioral assumption - ANSW-an assumption that describes the expected behavior of economic
decision makers; what motivates them
hypothesis - ANSW-a theory about how key variables relate to each other
positive economic statement - ANSW-a statement that can be proved or disproved by reference to facts
normative economic statement - ANSW-a statement that reflects on opinion, which cannot be proved or
disproved by reference to the facts
association-is-causation fallacy - ANSW-the incorrect idea that if two variables are associated in time,
one must necessarily cause the other
fallacy of composition - ANSW-the incorrect belief that what is true for the individual, or part, must
necessarily be true for the group, or the whole
secondary effects - ANSW-unintended consequences of economic actions that may develop over time as
people react to events
economic perspective - ANSW-a viewpoint that envisions individuals and institutions making rational
decisions by comparing the marginal benefits and marginal costs associated with their actions
"there is no free lunch" - ANSW-a saying that means whatever service is provided must be paid for by
someone
opportunity costs - ANSW-the value of the best alternative forgone when an item or activity is chosen
sunk cost - ANSW-a cost that has already been incurred in the past, cannot be recovered, and thus is
irrelevant for the present and future economic decisions
absolute advantage* - ANSW-the ability to produce something using fewer resources than other
producers use
Adam Smith - ANSW-"Wealth of Nations" author (1776, Great Britain); founder of mercantilism
mercantilism - ANSW-belief in the benefits of profitable trading commercialism; 1500-1750 (The
Exploration)
*Spain starts out as richest country then ends up bankrupt
laissez-faire - ANSW-hands off, free of government intervention
the invisible hand - ANSW-the ideology that markets will tend to themselves
division of labor - ANSW-organizing production of a good into its separate tasks
specialization of labor - ANSW-focusing work effort on a particular product or a single task
Adam Smith's 4 principles - ANSW-laissez-faire
the invisible hand
division of labor
specialization of labor
comparative advantage - ANSW-the ability to produce something at a lower opportunity cost than other
producers face
study set | Questions and verified
Answers
economics - ANSW-the study of how people use their scarce resources to satisfy their unlimited wants
resources - ANSW-the inputs, or factors of production, used to produce the goods and services that
people want; resources consist of labor, capital, natural resources, and entrepreneurial ability
labor - ANSW-the physical and mental effort used to produce goods and services
capital - ANSW-the buildings, equipment, and human skills used to produce goods and services
natural resources - ANSW-all gifts of nature used to produce goods and services; includes renewable and
exhaustible resources
entrepreneurial ability - ANSW-the imagination required to develop a new product or process, the skill
needed to organize production, and the willingness to take the risk of profit or loss
entrepreneur - ANSW-a profit-seeking decision maker who starts with an idea, organizes an enterprise to
bring that idea to life, and assumes the risk of the operation
wages - ANSW-payment to resource owners for their labor
interest - ANSW-payment to resource owners for the use of their capital
rent - ANSW-payment to resource owners for the use of their natural resources
profit - ANSW-reward for entrepreneurial ability; sales minus resource cost
good - ANSW-a tangible product used to satisfy human wants
service - ANSW-an activity, or intangible product, used to satisfy human wants
scarcity - ANSW-occurs when the amount people desire exceeds the amount available at a zero price
market - ANSW-a set of arrangements by which buyers and sellers carry out exchange at mutually
agreeable terms
product market - ANSW-a market in which a good or service is bought and sold
resource market - ANSW-a market in which a resource is bought and sold
circular-flow model - ANSW-a diagram that traces the flow of resources, products, income, and revenue
among economic decision makers
rational self-interest - ANSW-each individual tries to maximize the expected benefit achieved with a
given cost or to minimize the expected cost of achieving a given benefit
marginal - ANSW-incremental, additional, or extra; used to describe a change in an economic variable
microeconomics - ANSW-the study of the economic behavior in particular markets, such as that for
computers or unskilled labor
macroeconomics - ANSW-the study of the economic behavior of entire economies, as measured, for
example, by total production and employment (GDP)
economic fluctuations* - ANSW-the rise and fall of economic activity relative to the long-term growth
trend of the economy; also called business cycles
economic theory (model) - ANSW-a simplification of reality used to make predictions about cause and
effect in the real world
, the scientific method - ANSW-...begin with a question...
variable - ANSW-a measure, such as price or quantity, that can take on different values at different times
other-things-constant assumption - ANSW-the assumption, when focusing on the relation among key
economic variable, that other variables remain unchanged, in Latin, "ceteris paribus"
behavioral assumption - ANSW-an assumption that describes the expected behavior of economic
decision makers; what motivates them
hypothesis - ANSW-a theory about how key variables relate to each other
positive economic statement - ANSW-a statement that can be proved or disproved by reference to facts
normative economic statement - ANSW-a statement that reflects on opinion, which cannot be proved or
disproved by reference to the facts
association-is-causation fallacy - ANSW-the incorrect idea that if two variables are associated in time,
one must necessarily cause the other
fallacy of composition - ANSW-the incorrect belief that what is true for the individual, or part, must
necessarily be true for the group, or the whole
secondary effects - ANSW-unintended consequences of economic actions that may develop over time as
people react to events
economic perspective - ANSW-a viewpoint that envisions individuals and institutions making rational
decisions by comparing the marginal benefits and marginal costs associated with their actions
"there is no free lunch" - ANSW-a saying that means whatever service is provided must be paid for by
someone
opportunity costs - ANSW-the value of the best alternative forgone when an item or activity is chosen
sunk cost - ANSW-a cost that has already been incurred in the past, cannot be recovered, and thus is
irrelevant for the present and future economic decisions
absolute advantage* - ANSW-the ability to produce something using fewer resources than other
producers use
Adam Smith - ANSW-"Wealth of Nations" author (1776, Great Britain); founder of mercantilism
mercantilism - ANSW-belief in the benefits of profitable trading commercialism; 1500-1750 (The
Exploration)
*Spain starts out as richest country then ends up bankrupt
laissez-faire - ANSW-hands off, free of government intervention
the invisible hand - ANSW-the ideology that markets will tend to themselves
division of labor - ANSW-organizing production of a good into its separate tasks
specialization of labor - ANSW-focusing work effort on a particular product or a single task
Adam Smith's 4 principles - ANSW-laissez-faire
the invisible hand
division of labor
specialization of labor
comparative advantage - ANSW-the ability to produce something at a lower opportunity cost than other
producers face
