Midterm Econ 1500 Study Guide Exam
With 100% Correct Answers
Macroeconomics - CORRECT ANSWER✔✔The study of the economy as a whole
Microeconomics - CORRECT ANSWER✔✔the study of the economic behavior and decision
making of small units, such as individuals, families, and businesses
Economics - CORRECT ANSWER✔✔the study of how individuals and society choose to use
scarce resources to produce goods and services to help meet the wants and needs of society
Equilibrium - CORRECT ANSWER✔✔a state in which opposing forces or influences are balanced.
this is found when the quantity that is demanded is the same as the quantity supplied
Scarcity - CORRECT ANSWER✔✔Limited quantities of resources to meet unlimited wants
Economic Resources - CORRECT ANSWER✔✔all natural, human, and manufactured resources
that go into the production of goods and services
Human Capital - CORRECT ANSWER✔✔the knowledge and skills that workers acquire through
education, training, and experience
Capital - CORRECT ANSWER✔✔Machines that a producer owns.
Adam Smith, The Wealth of Nations - CORRECT ANSWER✔✔Promoted laissez-faire, free-market
economy, and supply-and-demand economics.
, James Watt - CORRECT ANSWER✔✔Scottish engineer and inventor whose improvements in the
steam engine led to its wide use in industry (1736-1819).
invisible hand principle - CORRECT ANSWER✔✔market prices coordinate the actions of self-
interested individuals and direct them toward activities that promote the general welfare.
Stable Equilibrium - CORRECT ANSWER✔✔A. If you are there, you will stay there
B. If you are not there, you will go there
market failure - CORRECT ANSWER✔✔a situation in which the free market, operating on its
own, does not distribute resources efficiently.
Market failure occurs when: - CORRECT ANSWER✔✔individual actions have side effects that are
not properly taken into account. Monopoly, inflation, etc.
Inflation - CORRECT ANSWER✔✔A continuous rise in the price of goods and services
Deflation - CORRECT ANSWER✔✔a decrease in the general level of prices
Externalities - CORRECT ANSWER✔✔economic side effects or by-products that affect an
uninvolved third party; can be negative or positive.
Principle 1: People Face Trade-offs - CORRECT ANSWER✔✔To get something that we like, we
have to give up something else that we also like
Efficiency - CORRECT ANSWER✔✔the property of society getting the most it can from its scarce
resources
With 100% Correct Answers
Macroeconomics - CORRECT ANSWER✔✔The study of the economy as a whole
Microeconomics - CORRECT ANSWER✔✔the study of the economic behavior and decision
making of small units, such as individuals, families, and businesses
Economics - CORRECT ANSWER✔✔the study of how individuals and society choose to use
scarce resources to produce goods and services to help meet the wants and needs of society
Equilibrium - CORRECT ANSWER✔✔a state in which opposing forces or influences are balanced.
this is found when the quantity that is demanded is the same as the quantity supplied
Scarcity - CORRECT ANSWER✔✔Limited quantities of resources to meet unlimited wants
Economic Resources - CORRECT ANSWER✔✔all natural, human, and manufactured resources
that go into the production of goods and services
Human Capital - CORRECT ANSWER✔✔the knowledge and skills that workers acquire through
education, training, and experience
Capital - CORRECT ANSWER✔✔Machines that a producer owns.
Adam Smith, The Wealth of Nations - CORRECT ANSWER✔✔Promoted laissez-faire, free-market
economy, and supply-and-demand economics.
, James Watt - CORRECT ANSWER✔✔Scottish engineer and inventor whose improvements in the
steam engine led to its wide use in industry (1736-1819).
invisible hand principle - CORRECT ANSWER✔✔market prices coordinate the actions of self-
interested individuals and direct them toward activities that promote the general welfare.
Stable Equilibrium - CORRECT ANSWER✔✔A. If you are there, you will stay there
B. If you are not there, you will go there
market failure - CORRECT ANSWER✔✔a situation in which the free market, operating on its
own, does not distribute resources efficiently.
Market failure occurs when: - CORRECT ANSWER✔✔individual actions have side effects that are
not properly taken into account. Monopoly, inflation, etc.
Inflation - CORRECT ANSWER✔✔A continuous rise in the price of goods and services
Deflation - CORRECT ANSWER✔✔a decrease in the general level of prices
Externalities - CORRECT ANSWER✔✔economic side effects or by-products that affect an
uninvolved third party; can be negative or positive.
Principle 1: People Face Trade-offs - CORRECT ANSWER✔✔To get something that we like, we
have to give up something else that we also like
Efficiency - CORRECT ANSWER✔✔the property of society getting the most it can from its scarce
resources
