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ECON-B 251 EXAM 1 QUESTIONS AND
VERIFIED ANSWERS 2025
economic growth-correct-answer-what does a shifting out of the PPC represent?
consumer goods-correct-answer-goods produced for personal satisfaction
capital goods-correct-answer-goods used to produce other goods
per-worker production function-correct-answer-used to illustrate long run
economic growth using the factors of production along with other variables, such
as technology.
law of diminishing returns-correct-answer-A decrease in a firm's marginal output
from adding an additional unit of input.
market-correct-answer-arrangements (or location) that individuals have for
exchanging with one another.
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markets & prices-correct-answer-an economic system that allocates resources
based on relative prices determined by supply and demand
demand-correct-answer-quantities of specific goods or services that individuals or
groups will purchase at various possible prices, other things being constant
The Law of Demand-correct-answer-quantity demanded is inversely related to
price. If the price of x increases, the quantity demanded decreases.
substitution effect-correct-answer-When the relative price (opportunity cost) of a
good or service rises, people seek substitutes for it, so the quantity demanded of
the good or service decreases.
income effect-correct-answer-When the price of a good or service rises relative to
income, people cannot afford all the things they previously bought, so the
quantity demanded of the good or service decreases.
ECON-B 251 EXAM 1 QUESTIONS AND
VERIFIED ANSWERS 2025
economic growth-correct-answer-what does a shifting out of the PPC represent?
consumer goods-correct-answer-goods produced for personal satisfaction
capital goods-correct-answer-goods used to produce other goods
per-worker production function-correct-answer-used to illustrate long run
economic growth using the factors of production along with other variables, such
as technology.
law of diminishing returns-correct-answer-A decrease in a firm's marginal output
from adding an additional unit of input.
market-correct-answer-arrangements (or location) that individuals have for
exchanging with one another.
, 2|Page
markets & prices-correct-answer-an economic system that allocates resources
based on relative prices determined by supply and demand
demand-correct-answer-quantities of specific goods or services that individuals or
groups will purchase at various possible prices, other things being constant
The Law of Demand-correct-answer-quantity demanded is inversely related to
price. If the price of x increases, the quantity demanded decreases.
substitution effect-correct-answer-When the relative price (opportunity cost) of a
good or service rises, people seek substitutes for it, so the quantity demanded of
the good or service decreases.
income effect-correct-answer-When the price of a good or service rises relative to
income, people cannot afford all the things they previously bought, so the
quantity demanded of the good or service decreases.
