ECON 1100 Exam 1 Questions with Correct Answers Latest Update 2026/2027

ECON 1100 Exam 1 Questions with Correct Answers Latest Update 2026/2027 Economics - Answers The study of how individuals and societies make choices under conditions of scarcity Scarcity - Answers The condition that arises because resources are limited but wants are unlimited Opportunity Cost - Answers The value of the next best alternative given up when a choice is made Explicit Cost - Answers A direct monetary payment made by a firm or individual Implicit Cost - Answers A non-monetary opportunity cost such as time or foregone income Marginal Thinking - Answers Comparing marginal benefits to marginal costs when making decisions Marginal Benefit - Answers The additional benefit from consuming one more unit of a good or service Marginal Cost - Answers The additional cost from consuming one more unit of a good or service Rational Decision Rule - Answers Do an activity if marginal benefit is greater than or equal to marginal cost Microeconomics - Answers The study of individual decision-makers such as households and firms Macroeconomics - Answers The study of the economy as a whole including inflation, unemployment, and growth Positive Economics - Answers Describes how the economy actually works Normative Economics - Answers Expresses opinions or value judgments about how the economy should work Chapter 2: Economic Models & Trade - Answers Economic Model - Answers A simplified representation of reality used to understand economic relationships Ceteris Paribus - Answers Holding all other relevant factors constant Production Possibilities Curve (PPC) - Answers A graph showing maximum possible output combinations of two goods Efficient Point - Answers A point on the PPC where resources are fully used Inefficient Point - Answers A point inside the PPC where resources are underutilized Unattainable Point - Answers A point outside the PPC that cannot be reached with current resources Opportunity Cost (PPC) - Answers The slope of the PPC representing trade-offs between goods Law of Increasing Opportunity Cost - Answers As production of one good increases, opportunity cost increases Absolute Advantage - Answers The ability to produce more of a good using fewer resources Comparative Advantage - Answers The ability to produce a good at a lower opportunity cost Specialization - Answers Focusing production on goods with comparative advantage Gains from Trade - Answers Benefits that arise when parties specialize and trade Chapter 3: Demand, Supply, and Markets - Answers Market - Answers A place where buyers and sellers interact Demand - Answers The willingness and ability to buy a good at different prices Law of Demand - Answers As price rises, quantity demanded falls, ceteris paribus Quantity Demanded - Answers The amount consumers are willing and able to buy at a specific price