ECN 212 Midterm #1 Questions And All
Correct Answers 2026-2027 Updated.
What is economics? - Answer the study of the choices people make to attain their goals, given
their scarce resources.
What is scarcity? - Answer a situation in which unlimited wants exceed the limited resources
available to fulfill those wants.
What is an economic model? - Answer a simplified version of reality used to analyze real-
world economic situations.
What are the three key economic ideas? - Answer 1) People are rational
2) People respond to economic incentives
3) Optimal decisions are made at the margin
Marginal Analysis - Answer analysis that involves comparing marginal benefits and marginal
costs.
What are the three economic questions? - Answer 1) What goods and services will be
produced?
2) How will the goods and services be produced?
3) Who will receive the goods and services produced?
Trade-off - Answer because of scarcity, producing more of one good or service means
producing less of another good or service.
Opportunity Cost - Answer the highest-valued alternative that must be given up to engage in
an activity.
Productive Efficiency - Answer a situation in which a good or service is produced at the lowest
possible cost.
Allocative Efficiency - Answer a state of the economy in which production is in accordance
with consumer preferences.
Equity - Answer the fair distribution of economic benefits. There is often a trade-off between
efficiency and equity.
, Positive Analysis - Answer an analysis concerned with what is.
Normative Analysis - Answer an analysis concerned with what ought to be.
Microeconomics - Answer the study of how households and firms make choices, how they
interact in markets, and how the government attempts to influence their choices.
Macroeconmics - Answer the study of how the economy as a whole, including topics such as
inflation, unemployment and economic growth.
Functional ditribution of income - Answer the distribution of income among the factors of
production
Personal Distribution of Income - Answer the distribution of income among households
circular flow model - Answer a model of the economy that shows:
-the circular flow of expenditures and incomes.
- the way those choices interact in markets to determine what, how and for whom good and
services are produced.
Households - Answer individuals or people living together as decision making units.
Firms - Answer are institutions that organize production of goods and services.
Market - Answer any arrangement that brings buyers and sellers together.
Goodsmarket - Answer markets in which goods and services are bought and sold
Factor markets - Answer markets in which factors of production are bought and sold.
Production Possibilities Frontier (PPF) - Answer a curve showing the maximum attainable
combinations of two products that may be produced with available resources and current
technology.
Quantity Demanded - Answer the amount of a good or service that a consumer is willing and
able to purchase at a given price.
Correct Answers 2026-2027 Updated.
What is economics? - Answer the study of the choices people make to attain their goals, given
their scarce resources.
What is scarcity? - Answer a situation in which unlimited wants exceed the limited resources
available to fulfill those wants.
What is an economic model? - Answer a simplified version of reality used to analyze real-
world economic situations.
What are the three key economic ideas? - Answer 1) People are rational
2) People respond to economic incentives
3) Optimal decisions are made at the margin
Marginal Analysis - Answer analysis that involves comparing marginal benefits and marginal
costs.
What are the three economic questions? - Answer 1) What goods and services will be
produced?
2) How will the goods and services be produced?
3) Who will receive the goods and services produced?
Trade-off - Answer because of scarcity, producing more of one good or service means
producing less of another good or service.
Opportunity Cost - Answer the highest-valued alternative that must be given up to engage in
an activity.
Productive Efficiency - Answer a situation in which a good or service is produced at the lowest
possible cost.
Allocative Efficiency - Answer a state of the economy in which production is in accordance
with consumer preferences.
Equity - Answer the fair distribution of economic benefits. There is often a trade-off between
efficiency and equity.
, Positive Analysis - Answer an analysis concerned with what is.
Normative Analysis - Answer an analysis concerned with what ought to be.
Microeconomics - Answer the study of how households and firms make choices, how they
interact in markets, and how the government attempts to influence their choices.
Macroeconmics - Answer the study of how the economy as a whole, including topics such as
inflation, unemployment and economic growth.
Functional ditribution of income - Answer the distribution of income among the factors of
production
Personal Distribution of Income - Answer the distribution of income among households
circular flow model - Answer a model of the economy that shows:
-the circular flow of expenditures and incomes.
- the way those choices interact in markets to determine what, how and for whom good and
services are produced.
Households - Answer individuals or people living together as decision making units.
Firms - Answer are institutions that organize production of goods and services.
Market - Answer any arrangement that brings buyers and sellers together.
Goodsmarket - Answer markets in which goods and services are bought and sold
Factor markets - Answer markets in which factors of production are bought and sold.
Production Possibilities Frontier (PPF) - Answer a curve showing the maximum attainable
combinations of two products that may be produced with available resources and current
technology.
Quantity Demanded - Answer the amount of a good or service that a consumer is willing and
able to purchase at a given price.
