Econ 110 Exam 1 Questions With Correct
Answers
Circular |Flow |Diagram |- |CORRECT |ANSWER✔✔-A |visual |model |of |the |economy |that |shows |
how |dollars |flow |through |markets |among |households |and |firms
Factors |of |Production |- |CORRECT |ANSWER✔✔-land, |labor, |and |capital; |the |three |groups |of |
resources |that |are |used |to |make |all |goods |and |services
Markets |for |goods |and |services |- |CORRECT |ANSWER✔✔-Households |are |buyers |(of |the |output
|firms |produce); |Firms |are |sellers
Markets |for |factors |of |production |- |CORRECT |ANSWER✔✔-households |are |sellers, |and |firms |
are |buyers
* |Households |provide |the |inputs |that |firms |use |to |produce |goods |and |services.
Firms |- |CORRECT |ANSWER✔✔-* |Produce |and |sell |goods |and |services
* |Hire |and |use |factors |of |production
Households |- |CORRECT |ANSWER✔✔-* |Buy |and |consume |goods |and |services
* |Own |and |sell |factors |of |production
Production |possibilities |frontier |- |CORRECT |ANSWER✔✔-a |graph |that |shows |the |combinations |
of |output |that |the |economy |can |possibly |produce |given |the |available |factors |of |production |
and |the |available |production |technology
, Opportunity |Cost |- |CORRECT |ANSWER✔✔-What |you |give |up |to |get |something
Positive |statement |- |CORRECT |ANSWER✔✔-claims |that |attempt |to |describe |the |world |as |it |is
* |can |be |proven |or |refuted |by |observation |of |evidence
Normative |statement |- |CORRECT |ANSWER✔✔-Prescriptive; |claims |about |how |the |world |ought
|to |be
* |Policy |advisers |use |these
Macroeconomics |- |CORRECT |ANSWER✔✔-The |study |of |economy-wide |phenomena, |including |
inflation, |unemployment, |and |economic |growth
Microeconomics |- |CORRECT |ANSWER✔✔-the |study |of |how |households |and |firms |make |
decisions |and |how |they |interact |in |markets
Absolute |advantage |- |CORRECT |ANSWER✔✔-the |ability |to |produce |a |good |using |fewer |inputs |
(resources) |than |another |producer
Comparative |Advantage |- |CORRECT |ANSWER✔✔-the |ability |to |produce |a |good |at |a |lower |
opportunity |cost |than |another |producer
* |reflects |the |RELATIVE |opportunity |cost
Price |of |trade |(general |rule) |- |CORRECT |ANSWER✔✔-For |both |parties |to |gain |from |trade, |the |
price |at |which |they |trade |must |lie |between |the |two |opportunity |costs
Budget |constraint |- |CORRECT |ANSWER✔✔-The |limit |on |the |consumption |bundles |that |a |
consumer |can |afford
Answers
Circular |Flow |Diagram |- |CORRECT |ANSWER✔✔-A |visual |model |of |the |economy |that |shows |
how |dollars |flow |through |markets |among |households |and |firms
Factors |of |Production |- |CORRECT |ANSWER✔✔-land, |labor, |and |capital; |the |three |groups |of |
resources |that |are |used |to |make |all |goods |and |services
Markets |for |goods |and |services |- |CORRECT |ANSWER✔✔-Households |are |buyers |(of |the |output
|firms |produce); |Firms |are |sellers
Markets |for |factors |of |production |- |CORRECT |ANSWER✔✔-households |are |sellers, |and |firms |
are |buyers
* |Households |provide |the |inputs |that |firms |use |to |produce |goods |and |services.
Firms |- |CORRECT |ANSWER✔✔-* |Produce |and |sell |goods |and |services
* |Hire |and |use |factors |of |production
Households |- |CORRECT |ANSWER✔✔-* |Buy |and |consume |goods |and |services
* |Own |and |sell |factors |of |production
Production |possibilities |frontier |- |CORRECT |ANSWER✔✔-a |graph |that |shows |the |combinations |
of |output |that |the |economy |can |possibly |produce |given |the |available |factors |of |production |
and |the |available |production |technology
, Opportunity |Cost |- |CORRECT |ANSWER✔✔-What |you |give |up |to |get |something
Positive |statement |- |CORRECT |ANSWER✔✔-claims |that |attempt |to |describe |the |world |as |it |is
* |can |be |proven |or |refuted |by |observation |of |evidence
Normative |statement |- |CORRECT |ANSWER✔✔-Prescriptive; |claims |about |how |the |world |ought
|to |be
* |Policy |advisers |use |these
Macroeconomics |- |CORRECT |ANSWER✔✔-The |study |of |economy-wide |phenomena, |including |
inflation, |unemployment, |and |economic |growth
Microeconomics |- |CORRECT |ANSWER✔✔-the |study |of |how |households |and |firms |make |
decisions |and |how |they |interact |in |markets
Absolute |advantage |- |CORRECT |ANSWER✔✔-the |ability |to |produce |a |good |using |fewer |inputs |
(resources) |than |another |producer
Comparative |Advantage |- |CORRECT |ANSWER✔✔-the |ability |to |produce |a |good |at |a |lower |
opportunity |cost |than |another |producer
* |reflects |the |RELATIVE |opportunity |cost
Price |of |trade |(general |rule) |- |CORRECT |ANSWER✔✔-For |both |parties |to |gain |from |trade, |the |
price |at |which |they |trade |must |lie |between |the |two |opportunity |costs
Budget |constraint |- |CORRECT |ANSWER✔✔-The |limit |on |the |consumption |bundles |that |a |
consumer |can |afford
