ECON 110 ZIRLOTT TEST 1 STUDY GUIDE QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTION.
economics - (ANSWER)the study of how society manages its scarce resources
microeconomics - (ANSWER)study of how households and firms make decisions and how they interact in
markets; ti examine behavior and operation of the individual consumers and firms that make up
economy.
macroeconomics - (ANSWER)study of economy wide phenomena, including inflation, unemployment,
and economic growth
equality / equity - (ANSWER)the property of distributing economic prosperity uniformly among the
members of society
scarcity - (ANSWER)the limited nature of society's resources
efficiency - (ANSWER)the property of society getting the most it can from its scarce resources
tradeoff - (ANSWER)to achieve greater equality. getting more of one good requires sacrificing some of
the other
going to a party the night before your midterm leaves less time for studying -> what is this an example
of - (ANSWER)tradeoff
having more money to buy stuff requires working longer hours, which leaves less time for leisure ->
what is this an example of - (ANSWER)tradeoff
protecting the environment requires resources that could otherwise be used to produce consumer
goods -> what is this an example of - (ANSWER)tradeoff
opportunity cost - (ANSWER)whatever must be given up to obtain some item
, ECON 110 ZIRLOTT TEST 1 STUDY GUIDE QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTION.
give an example of opportunity cost - (ANSWER)college athletes who can earn millions if they drop out
of school and play professional sports are aware that the opportunity cost of their attending college is
very high. Not surprising they often decide that the benefit of a college education is not worth the cost.
rational people - (ANSWER)people who systematically and purposefully do the best they can to achieve
their objectives
thinking at the margin - (ANSWER)make decisions by evaluating costs and benefits of marginal changes
(incremental adjustments to an existing plan)
when a student considers whether to go to college for an additional year, he compares the fees and
foregone wages to the extra income he could earn with the extra year of edu. -> what is this an example
of - (ANSWER)thinking at the margin
when a manager considers whether to increase output, she compares the cost of the needed labor and
materials to the extra revenue-> what is this an example of - (ANSWER)thinking at the margin
market - (ANSWER)a group of buyers and sellers (need not be a single location)
market economy - (ANSWER)an economy that allocates resources through the decentralized decisions
of many firms and households as they interact in markets for goods and services
Invisible hand - (ANSWER)households and firms interacting in markets act as if they are guided by an
"invisible hand" that leads them to desirable market outcomes
market failure - (ANSWER)a situation in which a market left on its own fails to allocate resources
efficiently
model - (ANSWER)a highly simplified representation of a more complicated reality. Economists use
models to study economic issues
COMPLETE SOLUTION.
economics - (ANSWER)the study of how society manages its scarce resources
microeconomics - (ANSWER)study of how households and firms make decisions and how they interact in
markets; ti examine behavior and operation of the individual consumers and firms that make up
economy.
macroeconomics - (ANSWER)study of economy wide phenomena, including inflation, unemployment,
and economic growth
equality / equity - (ANSWER)the property of distributing economic prosperity uniformly among the
members of society
scarcity - (ANSWER)the limited nature of society's resources
efficiency - (ANSWER)the property of society getting the most it can from its scarce resources
tradeoff - (ANSWER)to achieve greater equality. getting more of one good requires sacrificing some of
the other
going to a party the night before your midterm leaves less time for studying -> what is this an example
of - (ANSWER)tradeoff
having more money to buy stuff requires working longer hours, which leaves less time for leisure ->
what is this an example of - (ANSWER)tradeoff
protecting the environment requires resources that could otherwise be used to produce consumer
goods -> what is this an example of - (ANSWER)tradeoff
opportunity cost - (ANSWER)whatever must be given up to obtain some item
, ECON 110 ZIRLOTT TEST 1 STUDY GUIDE QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTION.
give an example of opportunity cost - (ANSWER)college athletes who can earn millions if they drop out
of school and play professional sports are aware that the opportunity cost of their attending college is
very high. Not surprising they often decide that the benefit of a college education is not worth the cost.
rational people - (ANSWER)people who systematically and purposefully do the best they can to achieve
their objectives
thinking at the margin - (ANSWER)make decisions by evaluating costs and benefits of marginal changes
(incremental adjustments to an existing plan)
when a student considers whether to go to college for an additional year, he compares the fees and
foregone wages to the extra income he could earn with the extra year of edu. -> what is this an example
of - (ANSWER)thinking at the margin
when a manager considers whether to increase output, she compares the cost of the needed labor and
materials to the extra revenue-> what is this an example of - (ANSWER)thinking at the margin
market - (ANSWER)a group of buyers and sellers (need not be a single location)
market economy - (ANSWER)an economy that allocates resources through the decentralized decisions
of many firms and households as they interact in markets for goods and services
Invisible hand - (ANSWER)households and firms interacting in markets act as if they are guided by an
"invisible hand" that leads them to desirable market outcomes
market failure - (ANSWER)a situation in which a market left on its own fails to allocate resources
efficiently
model - (ANSWER)a highly simplified representation of a more complicated reality. Economists use
models to study economic issues
