Economics 101 Exam 1 - SDSU Cullivan Exam:100%
Expert Verified Study Guide Real Testing 2026|2027
Questions Detailed Answers and Instructor Note for A+
Guaranteed Pass
Law of increasing opportunity cost - Answers -A principle in economics that holds that because
some resources are better suited to producing one good or service than another, as the
production of a good or service increases, the opportunity cost of each additional unit rises
Circular flow model - Answers -A model that concisely describes how goods, services, resources,
and money flow back and forth in an economy.
Market - Answers -Any place where, or mechanism by which, buyers and sellers interact to
trade goods, services, or resources
Good - Answers -a tangible product that consumers, firms, or governments wish to purchase
Service - Answers -an intangible product or action that consumers, firms, or governments wish
to purchase
Resource - Answers -Any item, whether a gift of nature, the result of production, or the result of
human effort, that is used to produce goods and services.
1|Page
,Law of demand - Answers -A principle in economics that states that as the price of a good,
service, or resource rises, the quantity demanded will decrease, and vice versa, all else held
constant
Demand schedule - Answers -A tabular representation of the relationship between the price of
a good, service, or resource and the quantities consumers are willing and able to buy over a
fixed time period, all else are held constant
Demand curve - Answers -A tabular representation of the relationship between the price of a
good, service, or resource and the quantities consumers are willing and able to buy over a fixed
time period, all else held constant
Quantity demanded - Answers -The quantity of a good, service, or resource that consumers are
willing and able to buy at a given price
Income effect - Answers -The effect that a change in the price of a good, service, or resource has
on the purchasing power of income.
-When prices decrease, the purchasing power of income increases and consumers are able to
purchase more goods, services, or resources
Substitution effect - Answers -The effect that a change in the price of one good, service, or
resource has on the demand for another.
2|Page
, -An increase in the price of one good will increase the demand for it's substitutes, and vice versa
Diminishing marginal utility - Answers -The negative relationship between the quantity of a
good, service, or resource and the marginal utility obtained from each additional unit consumed
in a given period of time.
Market demand - Answers -The overall or total demand for a good, service, or resource. It
represents the horizontal summation of the quantities demanded by individuals, firms, states or
even nations at each price over a fixed time period, all else held constant
Shift in demand - Answers -A change in the quantity of a good, service, or resource demanded
at every price.
-Graphically:
-an increase in demand is represented by a rightward shift of the demand curve
-a decrease in demand in represented by a leftward shift of the demand curve
movement along the demand curve - Answers -a change in the quantity of a good, service, or
resource demanded that is the result of a change in that good's price.
-Graphically:
-This change is represented as a movement along an existing demand curve
3|Page
Expert Verified Study Guide Real Testing 2026|2027
Questions Detailed Answers and Instructor Note for A+
Guaranteed Pass
Law of increasing opportunity cost - Answers -A principle in economics that holds that because
some resources are better suited to producing one good or service than another, as the
production of a good or service increases, the opportunity cost of each additional unit rises
Circular flow model - Answers -A model that concisely describes how goods, services, resources,
and money flow back and forth in an economy.
Market - Answers -Any place where, or mechanism by which, buyers and sellers interact to
trade goods, services, or resources
Good - Answers -a tangible product that consumers, firms, or governments wish to purchase
Service - Answers -an intangible product or action that consumers, firms, or governments wish
to purchase
Resource - Answers -Any item, whether a gift of nature, the result of production, or the result of
human effort, that is used to produce goods and services.
1|Page
,Law of demand - Answers -A principle in economics that states that as the price of a good,
service, or resource rises, the quantity demanded will decrease, and vice versa, all else held
constant
Demand schedule - Answers -A tabular representation of the relationship between the price of
a good, service, or resource and the quantities consumers are willing and able to buy over a
fixed time period, all else are held constant
Demand curve - Answers -A tabular representation of the relationship between the price of a
good, service, or resource and the quantities consumers are willing and able to buy over a fixed
time period, all else held constant
Quantity demanded - Answers -The quantity of a good, service, or resource that consumers are
willing and able to buy at a given price
Income effect - Answers -The effect that a change in the price of a good, service, or resource has
on the purchasing power of income.
-When prices decrease, the purchasing power of income increases and consumers are able to
purchase more goods, services, or resources
Substitution effect - Answers -The effect that a change in the price of one good, service, or
resource has on the demand for another.
2|Page
, -An increase in the price of one good will increase the demand for it's substitutes, and vice versa
Diminishing marginal utility - Answers -The negative relationship between the quantity of a
good, service, or resource and the marginal utility obtained from each additional unit consumed
in a given period of time.
Market demand - Answers -The overall or total demand for a good, service, or resource. It
represents the horizontal summation of the quantities demanded by individuals, firms, states or
even nations at each price over a fixed time period, all else held constant
Shift in demand - Answers -A change in the quantity of a good, service, or resource demanded
at every price.
-Graphically:
-an increase in demand is represented by a rightward shift of the demand curve
-a decrease in demand in represented by a leftward shift of the demand curve
movement along the demand curve - Answers -a change in the quantity of a good, service, or
resource demanded that is the result of a change in that good's price.
-Graphically:
-This change is represented as a movement along an existing demand curve
3|Page
