ECON 1500 Exam Test With Correct and verified
answers.
What is Economics? - correct answer The study of people and the choices they make in
a world of scarcity.
4 Themes of Economics - correct answer -Definition of Economics
-Definition of supply
- Definition of Demand
-Mutually Beneficial Voluntary Exchange (if the trade is voluntary both parties benefit.)
Scarcity: - correct answer Anything that has a positive price is scarce.
-A thing that is add to be "scarce" if, at a zero price
4 Basic groups of Resources - correct answer 1. Land
2. Labor
3. Capital
4. Entrepreneurial Abilities
Land Resource - correct answer all natural resources, or gifts of nature
Labor Resource - correct answer The physical and mental effort of workers
Capital Resource - correct answer man made resources used in producing things.
-Physical Capital: " "
-Human Capital: The know-How: school to make yourself more marketable (knowledge)
Entrepreneurial Abilities - correct answer -The human resource that organizes labor,
land, and capital
- Take more risks
- Notice a need that is not being met
-License: research ( word of mouth); main employers/ creator of jobs; open for progress;
see them as heroes.
Scarce Resources Questions - correct answer 1. What is to be produced? what the
consumer wants
2. how will it be produced? The way it has more net gain than the consumer
3. When will it be produced? ex. Christmas Trees not in July
4. Who is going to get it? The value determined by taste and preferences.
Methods - correct answer 1. The market mechanism
2. Government Dictates: what, when, and for whom
3. Violence: let people get weapons and physically fight it out
-Equally and Efficiency
-Competition and Value
, Rational Self Interest - correct answer People will make the choices that, at the time and
with the information they have at their disposal, will give them the greatest amount of
satisfaction for the effort or money they spend.
-Mutually Beneficial Voluntary Exchange
Common Mistakes in Economic Analysis - correct answer 1. The fallacy that association
is causation
2. The fallacy of composition
3. The mistake of ignoring secondary effects
4. Violation of the Ceteris Paribus (All else constant) condition
Fallacy that Association is Causation - correct answer -After this, therefore because of
this fallacy
-ex. Rooster makes sun come up
The Fallacy of composition - correct answer - The false assumption that what is best for
one would be best for the group as a whole
ex. Bumper crop --> rise in $
ex. fire in movie theatre
The mistake of ignoring secondary effects - correct answer ex. min wage
*almost every decision
Violation of the Ceteris Paribus - correct answer (all else constant) condition
-raise the price (keeping others the same) less will be purchased
- As price decreases more will be purchased
Macro vs. Micro - correct answer Forest vs. Tree
Microeconomics: - correct answer the study of individual economics units- the behavior
of buyers, sellers, product markets, resource markets, etc.
Macroeconomics: - correct answer the study of aggregates in the economy.
1. Understanding Opportunity Cost: - correct answer -No such thing as FREE
- The opportunity cost of a thing is the highest valued forgone "opportunity"
-Buying a soda: dollars could be somewhere else. time spent somewhere else.
*Any cost is an opportunity cost
-What you give to up to get something
-ex. going to get ice cream, but having to go get gas. ( 3 people going to get gas)
**** Explicit and Implicit
** Explicit: - correct answer Transaction (money exchange)
answers.
What is Economics? - correct answer The study of people and the choices they make in
a world of scarcity.
4 Themes of Economics - correct answer -Definition of Economics
-Definition of supply
- Definition of Demand
-Mutually Beneficial Voluntary Exchange (if the trade is voluntary both parties benefit.)
Scarcity: - correct answer Anything that has a positive price is scarce.
-A thing that is add to be "scarce" if, at a zero price
4 Basic groups of Resources - correct answer 1. Land
2. Labor
3. Capital
4. Entrepreneurial Abilities
Land Resource - correct answer all natural resources, or gifts of nature
Labor Resource - correct answer The physical and mental effort of workers
Capital Resource - correct answer man made resources used in producing things.
-Physical Capital: " "
-Human Capital: The know-How: school to make yourself more marketable (knowledge)
Entrepreneurial Abilities - correct answer -The human resource that organizes labor,
land, and capital
- Take more risks
- Notice a need that is not being met
-License: research ( word of mouth); main employers/ creator of jobs; open for progress;
see them as heroes.
Scarce Resources Questions - correct answer 1. What is to be produced? what the
consumer wants
2. how will it be produced? The way it has more net gain than the consumer
3. When will it be produced? ex. Christmas Trees not in July
4. Who is going to get it? The value determined by taste and preferences.
Methods - correct answer 1. The market mechanism
2. Government Dictates: what, when, and for whom
3. Violence: let people get weapons and physically fight it out
-Equally and Efficiency
-Competition and Value
, Rational Self Interest - correct answer People will make the choices that, at the time and
with the information they have at their disposal, will give them the greatest amount of
satisfaction for the effort or money they spend.
-Mutually Beneficial Voluntary Exchange
Common Mistakes in Economic Analysis - correct answer 1. The fallacy that association
is causation
2. The fallacy of composition
3. The mistake of ignoring secondary effects
4. Violation of the Ceteris Paribus (All else constant) condition
Fallacy that Association is Causation - correct answer -After this, therefore because of
this fallacy
-ex. Rooster makes sun come up
The Fallacy of composition - correct answer - The false assumption that what is best for
one would be best for the group as a whole
ex. Bumper crop --> rise in $
ex. fire in movie theatre
The mistake of ignoring secondary effects - correct answer ex. min wage
*almost every decision
Violation of the Ceteris Paribus - correct answer (all else constant) condition
-raise the price (keeping others the same) less will be purchased
- As price decreases more will be purchased
Macro vs. Micro - correct answer Forest vs. Tree
Microeconomics: - correct answer the study of individual economics units- the behavior
of buyers, sellers, product markets, resource markets, etc.
Macroeconomics: - correct answer the study of aggregates in the economy.
1. Understanding Opportunity Cost: - correct answer -No such thing as FREE
- The opportunity cost of a thing is the highest valued forgone "opportunity"
-Buying a soda: dollars could be somewhere else. time spent somewhere else.
*Any cost is an opportunity cost
-What you give to up to get something
-ex. going to get ice cream, but having to go get gas. ( 3 people going to get gas)
**** Explicit and Implicit
** Explicit: - correct answer Transaction (money exchange)
