ECON 101 STUDY GUIDE FOR EXAM 1
ISU QUESTIONS COMPLETE WITH
VERIFIED ANSWERS
\.Economy - ANSWERS✔-comes from the Greek word for "ones who manages a
household"
\.Economics - ANSWERS✔-is the study of how society
manages its scarce resources to produce
valuable commodities and distribute them
among different people.
\.Scarcity - ANSWERS✔-society has limited
resources and therefore cannot produce all
the goods and services people wish to
have.
\.How do people make decisions? - ANSWERS✔-1. People face trade offs.
2. The cost of something is what you give up
to get it.
3. Rational people think at the margin.
, 4. People respond to incentives. 5. Trade can make everyone better off.
6. Markets are usually a good way to
organize economic activity.
7. Governments can sometimes improve
economic outcomes.
8. The standard of living depends on a
country's production.
9. Prices rise when the government prints too
much money.
10. Society faces a short-run tradeoff
between inflation and unemployment.
\.Efficiency - ANSWERS✔-when society gets the most from its
scarce resources
\.Equality - ANSWERS✔-when prosperity is distributed uniformly
among society's members
\.Trade off - ANSWERS✔-To achieve greater equality
\.Opportunity Cost - ANSWERS✔-whatever must be given up to obtain it
ISU QUESTIONS COMPLETE WITH
VERIFIED ANSWERS
\.Economy - ANSWERS✔-comes from the Greek word for "ones who manages a
household"
\.Economics - ANSWERS✔-is the study of how society
manages its scarce resources to produce
valuable commodities and distribute them
among different people.
\.Scarcity - ANSWERS✔-society has limited
resources and therefore cannot produce all
the goods and services people wish to
have.
\.How do people make decisions? - ANSWERS✔-1. People face trade offs.
2. The cost of something is what you give up
to get it.
3. Rational people think at the margin.
, 4. People respond to incentives. 5. Trade can make everyone better off.
6. Markets are usually a good way to
organize economic activity.
7. Governments can sometimes improve
economic outcomes.
8. The standard of living depends on a
country's production.
9. Prices rise when the government prints too
much money.
10. Society faces a short-run tradeoff
between inflation and unemployment.
\.Efficiency - ANSWERS✔-when society gets the most from its
scarce resources
\.Equality - ANSWERS✔-when prosperity is distributed uniformly
among society's members
\.Trade off - ANSWERS✔-To achieve greater equality
\.Opportunity Cost - ANSWERS✔-whatever must be given up to obtain it
