ECON 2106 Exam 1 Questions with Correct Answers (Grade A+)
Question 1: scarcity
Answer: when you have more wants than you have the resources to obtain or enjoy
Question 2: incentive
Answer: a reward that encourages an action or a penalty that discourages one
Question 3: economics
Answer: the social science that studies the choices that individuals, businesses, governments, and entire
societies make as they cope with scarcity and the incentives that influence and reconcile those choices
Question 4: microeconomics
Answer: the study of choices that individuals and businesses make, the way that those choices interact in
markets, and the influence of governments
Question 5: macroeconomics
Answer: the study of performance of the national and global economies
Question 6: What are the 6 key areas that define an economic way of thinking?
Answer: choice rational choices benefit cost margin incentive
Question 7: choice
Answer: tradeoff, give up one thing to get something else
Question 8: rational choices
Answer: made by comparing benefits and costs, achieve greatest benefit over cost for the person making the
choice
Question 9: benefit
Answer: what you gain from something, determined by preferences
Question 10: cost
Answer: what you must give up to get something
Page 1
, Question 11: opportunity cost
Answer: the highest-valued alternative that must be given up to get the desired choice
Question 12: margin
Answer: where "how-much" choices are made
Question 13: marginal benefit
Answer: the benefit from pursuing an incremental increase in an activity
Question 14: marginal cost
Answer: the opportunity cost of pursuing an incremental increase in an activity
Question 15: positive statements
Answer: can be tested by checking it against facts
Question 16: normative statements
Answer: express an opinion and cannot be tested (usually have "should" in them)
Question 17: goal of economic science
Answer: to discover positive statements that are consistent with what we observe in the real world and that
enable us to understand how the world works
Question 18: economic models
Answer: a description of some aspect of the economic world that includes only those features that are
needed for the purpose at hand
Question 19: What 2 big questions summarize the scope of economics?
Answer: How do choices end up determining what, how, and for whom goods and services get produced?
When do choices made in the pursuit of self-interest also promote the social interest?
Question 20: factors of production
Answer: the "how" land, labor, capital, and entrepreneurship
Question 21: human capital
Answer: same as labor in factors of production
Page 2
Question 1: scarcity
Answer: when you have more wants than you have the resources to obtain or enjoy
Question 2: incentive
Answer: a reward that encourages an action or a penalty that discourages one
Question 3: economics
Answer: the social science that studies the choices that individuals, businesses, governments, and entire
societies make as they cope with scarcity and the incentives that influence and reconcile those choices
Question 4: microeconomics
Answer: the study of choices that individuals and businesses make, the way that those choices interact in
markets, and the influence of governments
Question 5: macroeconomics
Answer: the study of performance of the national and global economies
Question 6: What are the 6 key areas that define an economic way of thinking?
Answer: choice rational choices benefit cost margin incentive
Question 7: choice
Answer: tradeoff, give up one thing to get something else
Question 8: rational choices
Answer: made by comparing benefits and costs, achieve greatest benefit over cost for the person making the
choice
Question 9: benefit
Answer: what you gain from something, determined by preferences
Question 10: cost
Answer: what you must give up to get something
Page 1
, Question 11: opportunity cost
Answer: the highest-valued alternative that must be given up to get the desired choice
Question 12: margin
Answer: where "how-much" choices are made
Question 13: marginal benefit
Answer: the benefit from pursuing an incremental increase in an activity
Question 14: marginal cost
Answer: the opportunity cost of pursuing an incremental increase in an activity
Question 15: positive statements
Answer: can be tested by checking it against facts
Question 16: normative statements
Answer: express an opinion and cannot be tested (usually have "should" in them)
Question 17: goal of economic science
Answer: to discover positive statements that are consistent with what we observe in the real world and that
enable us to understand how the world works
Question 18: economic models
Answer: a description of some aspect of the economic world that includes only those features that are
needed for the purpose at hand
Question 19: What 2 big questions summarize the scope of economics?
Answer: How do choices end up determining what, how, and for whom goods and services get produced?
When do choices made in the pursuit of self-interest also promote the social interest?
Question 20: factors of production
Answer: the "how" land, labor, capital, and entrepreneurship
Question 21: human capital
Answer: same as labor in factors of production
Page 2
