ECO 111 Exam 1 question & answers
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Economics - correct answer ✔✔The study of how people use their scarce resources to satisfy
their unlimited wants.
Resources - correct answer ✔✔The inputs, or factors of production, used to produce the goods
and services that people want; consists of labor, capital, natural resources, and entrepreneurial
ability.
Labor - correct answer ✔✔The physical and mental effort used to produce goods and services.
Capital - correct answer ✔✔The buildings, equipment, and human skill used to produce goods
and services.
Natural Resources - correct answer ✔✔All gifts of nature used to produce goods and services;
includes renewable and exhaustible resources.
Entrepreneurial Ability - correct answer ✔✔The imagination required to develop a new product
or process, the skill needed to organize production, and the willingness to take the risk of profit
or loss.
Entrepreneur - correct answer ✔✔A profit seeking decision maker who starts with and idea,
organizes an enterprise to bring that idea to life, and assumes the risk of the operation.
Wages - correct answer ✔✔Payment to resource owners for their labor.
, Interest - correct answer ✔✔Payment to resource owners for the use of their capital.
Rent - correct answer ✔✔Payment to resource owners for the use of their natural resources.
Profit - correct answer ✔✔Reward for entrepreneurial ability; sales revenue minus resource
cost.
Good - correct answer ✔✔A Tangible product used to satisfy human want.
Service - correct answer ✔✔An activity, or intangible product, used to satisfy human wants.
Scarcity - correct answer ✔✔Occurs when the amount people desire exceeds the amount
available at a zero price.
Market - correct answer ✔✔A set of arrangements by which buyers and sellers carry out
exchange at mutually agreeable terms
Product Market - correct answer ✔✔A Market in which a good or service is bought and sold.
Circular-Flow Model - correct answer ✔✔A diagram that traces the flow of resources, products,
income, and revenue among economic decision makers.
Rational Self-Interest - correct answer ✔✔Each individual tries to maximize the expected
benefit achieved with a given cost or to minimize the expected cost of achieving a given benefit.
Marginal - correct answer ✔✔Incremental, additional, or extra; used to describe a change in an
economic variable.
rated A+
Economics - correct answer ✔✔The study of how people use their scarce resources to satisfy
their unlimited wants.
Resources - correct answer ✔✔The inputs, or factors of production, used to produce the goods
and services that people want; consists of labor, capital, natural resources, and entrepreneurial
ability.
Labor - correct answer ✔✔The physical and mental effort used to produce goods and services.
Capital - correct answer ✔✔The buildings, equipment, and human skill used to produce goods
and services.
Natural Resources - correct answer ✔✔All gifts of nature used to produce goods and services;
includes renewable and exhaustible resources.
Entrepreneurial Ability - correct answer ✔✔The imagination required to develop a new product
or process, the skill needed to organize production, and the willingness to take the risk of profit
or loss.
Entrepreneur - correct answer ✔✔A profit seeking decision maker who starts with and idea,
organizes an enterprise to bring that idea to life, and assumes the risk of the operation.
Wages - correct answer ✔✔Payment to resource owners for their labor.
, Interest - correct answer ✔✔Payment to resource owners for the use of their capital.
Rent - correct answer ✔✔Payment to resource owners for the use of their natural resources.
Profit - correct answer ✔✔Reward for entrepreneurial ability; sales revenue minus resource
cost.
Good - correct answer ✔✔A Tangible product used to satisfy human want.
Service - correct answer ✔✔An activity, or intangible product, used to satisfy human wants.
Scarcity - correct answer ✔✔Occurs when the amount people desire exceeds the amount
available at a zero price.
Market - correct answer ✔✔A set of arrangements by which buyers and sellers carry out
exchange at mutually agreeable terms
Product Market - correct answer ✔✔A Market in which a good or service is bought and sold.
Circular-Flow Model - correct answer ✔✔A diagram that traces the flow of resources, products,
income, and revenue among economic decision makers.
Rational Self-Interest - correct answer ✔✔Each individual tries to maximize the expected
benefit achieved with a given cost or to minimize the expected cost of achieving a given benefit.
Marginal - correct answer ✔✔Incremental, additional, or extra; used to describe a change in an
economic variable.
