ECON 201 EXAM -
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1 Terms Questions With Correct Answers.
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Economics./-
./correct./answer./✔✔The./study./of./the./choices./consumers,./business./managers,./and./gover
nment./officials./make./to./attain./their./foals,./give./scarce./resources.
Scarcity./-./correct./answer./✔✔
Although./our./wants./are./unlimited,./the./resources./available./are./not.
3./Key./Economic./Ideas./-./correct./answer./✔✔
People./are./rational../People./respond./to./economics./incentives../Optimal./decisions./are./mad
e./at./the./margin.
Tradeoffs./-./correct./answer./✔✔
Producing./more./of./one./good./or./service./means./producing./less./of./another./good./or./service.
Opportunity./Cost./-./correct./answer./✔✔
The./highest./valued./alternative./that./must./be./given./up./to./engage./in./an./activity.
Centrally./Planned./Economy./-./correct./answer./✔✔
An./economy./in./which./the./government./decides./how./economic./resources./will./be./allocated.
Market./Economy./-./correct./answer./✔✔
An./economy./in./which./the./decisions./of./households./and./firms./interacting./in./markets./allocat
e./economic./resources.
Market./Economy./-./correct./answer./✔✔Households./and./firms
Centrally./Planned./-./correct./answer./✔✔Government
Mixed./Economy./-./correct./answer./✔✔
An./economy./in./which./most./economic./decisions./result./from./the./interaction./of./buyers./and./s
ellers./in./markets./but./in./which./the./government./plays./a./significant./role./in./the./allocation./of./re
sources.
Productive./Efficiency./-./correct./answer./✔✔
When./a./good./or./service./is./produced./at./the./lowest./possible./cost.
Allocative./Efficiency./-./correct./answer./✔✔
A./state./of./the./economy./in./which./production./is./in./accordance./with./consumer./preferences;./i
n./particular,./every./good./or./service./is./produced./up./to./the./point./where./the./last./unit./provides.
/a./marginal./benefit./to./society./equal./to./the./marginal./cost./of./producing./it.
, Steps./Economists./use./to./make./a./useful./economic./model./-./correct./answer./✔✔
Decide./on./the./assumptions./to./use./in./developing./the./model../Formulate./a./testable./hypothe
sis../Use./economic./data./to./test./the./hypothesis../Revise./the./model./if./it./fails./to./explain./the./ec
onomic./data./well../Retain./the./revised./model./to./help./answer./similar./economic./questions./in./
the./future.
Economic./Variable./-./correct./answer./✔✔
Something./measurable./that./can./have./different./values,./such./as./the./incomes./of./doctors.
Hypothesis./-./correct./answer./✔✔
Statement./that./can./be./correct./or./incorrect./about./an./economic./variable.
Equity./-./correct./answer./✔✔The./fair./distribution./of./economic./benefits.
Positive./Analysis./-./correct./answer./✔✔Analysis./concerned./with./what./is.
Normative./Analysis./-./correct./answer./✔✔Analysis./concerned./with./what./ought./to./be.
Example./of./Positive./Analysis./-./correct./answer./✔✔Minimum./wage./is./$7.25
Example./of./Normative./Analysis./-./correct./answer./✔✔Minimum./wage./should./be./$8.00
Microeconomics./-./correct./answer./✔✔
The./study./of./how./households./and./firms./make./choices,./how./they./interact./in./markets,./and./
how./the./government./attempts./to./influence./their./choices.
Macroeconomics./-./correct./answer./✔✔
The./study./of./the./economy./as./a./whole,./including./topics./such./as./inflation,./unemployment,./a
nd./economic./growth.
Increasing./Marginal./Opportunity./Cost./-./correct./answer./✔✔
increasing./the./production./of./a./good./requires./larger./and./larger./decreases./in./the./productio
n./of./another./good.
Production./Possibilities./Frontier./(PPF)./-./correct./answer./✔✔Will./be./bowed./outward.
Production./Possibilities./Frontier./(PPF)./-./correct./answer./✔✔
A./curve./showing./the./maximum./attainable./combinations./of./two./products./that./may./be./prod
uced./with./available./resources./and./current./technology.
Along./-./correct./answer./✔✔
A./change./in./the./variables./being./related./will./be./movement./(TERM)./the./curve.
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1 Terms Questions With Correct Answers.
./ ./ ./ ./ ./
Economics./-
./correct./answer./✔✔The./study./of./the./choices./consumers,./business./managers,./and./gover
nment./officials./make./to./attain./their./foals,./give./scarce./resources.
Scarcity./-./correct./answer./✔✔
Although./our./wants./are./unlimited,./the./resources./available./are./not.
3./Key./Economic./Ideas./-./correct./answer./✔✔
People./are./rational../People./respond./to./economics./incentives../Optimal./decisions./are./mad
e./at./the./margin.
Tradeoffs./-./correct./answer./✔✔
Producing./more./of./one./good./or./service./means./producing./less./of./another./good./or./service.
Opportunity./Cost./-./correct./answer./✔✔
The./highest./valued./alternative./that./must./be./given./up./to./engage./in./an./activity.
Centrally./Planned./Economy./-./correct./answer./✔✔
An./economy./in./which./the./government./decides./how./economic./resources./will./be./allocated.
Market./Economy./-./correct./answer./✔✔
An./economy./in./which./the./decisions./of./households./and./firms./interacting./in./markets./allocat
e./economic./resources.
Market./Economy./-./correct./answer./✔✔Households./and./firms
Centrally./Planned./-./correct./answer./✔✔Government
Mixed./Economy./-./correct./answer./✔✔
An./economy./in./which./most./economic./decisions./result./from./the./interaction./of./buyers./and./s
ellers./in./markets./but./in./which./the./government./plays./a./significant./role./in./the./allocation./of./re
sources.
Productive./Efficiency./-./correct./answer./✔✔
When./a./good./or./service./is./produced./at./the./lowest./possible./cost.
Allocative./Efficiency./-./correct./answer./✔✔
A./state./of./the./economy./in./which./production./is./in./accordance./with./consumer./preferences;./i
n./particular,./every./good./or./service./is./produced./up./to./the./point./where./the./last./unit./provides.
/a./marginal./benefit./to./society./equal./to./the./marginal./cost./of./producing./it.
, Steps./Economists./use./to./make./a./useful./economic./model./-./correct./answer./✔✔
Decide./on./the./assumptions./to./use./in./developing./the./model../Formulate./a./testable./hypothe
sis../Use./economic./data./to./test./the./hypothesis../Revise./the./model./if./it./fails./to./explain./the./ec
onomic./data./well../Retain./the./revised./model./to./help./answer./similar./economic./questions./in./
the./future.
Economic./Variable./-./correct./answer./✔✔
Something./measurable./that./can./have./different./values,./such./as./the./incomes./of./doctors.
Hypothesis./-./correct./answer./✔✔
Statement./that./can./be./correct./or./incorrect./about./an./economic./variable.
Equity./-./correct./answer./✔✔The./fair./distribution./of./economic./benefits.
Positive./Analysis./-./correct./answer./✔✔Analysis./concerned./with./what./is.
Normative./Analysis./-./correct./answer./✔✔Analysis./concerned./with./what./ought./to./be.
Example./of./Positive./Analysis./-./correct./answer./✔✔Minimum./wage./is./$7.25
Example./of./Normative./Analysis./-./correct./answer./✔✔Minimum./wage./should./be./$8.00
Microeconomics./-./correct./answer./✔✔
The./study./of./how./households./and./firms./make./choices,./how./they./interact./in./markets,./and./
how./the./government./attempts./to./influence./their./choices.
Macroeconomics./-./correct./answer./✔✔
The./study./of./the./economy./as./a./whole,./including./topics./such./as./inflation,./unemployment,./a
nd./economic./growth.
Increasing./Marginal./Opportunity./Cost./-./correct./answer./✔✔
increasing./the./production./of./a./good./requires./larger./and./larger./decreases./in./the./productio
n./of./another./good.
Production./Possibilities./Frontier./(PPF)./-./correct./answer./✔✔Will./be./bowed./outward.
Production./Possibilities./Frontier./(PPF)./-./correct./answer./✔✔
A./curve./showing./the./maximum./attainable./combinations./of./two./products./that./may./be./prod
uced./with./available./resources./and./current./technology.
Along./-./correct./answer./✔✔
A./change./in./the./variables./being./related./will./be./movement./(TERM)./the./curve.
